Himachal Pradesh: RDG Discontinuation Impact

Shimla, Feb 9 (PTI) Discontinuation of revenue deficit grant (RDG) may force the Himachal Government to take hard steps like rolling back subsidies, abolition of posts lying vacant for the past two years and freezing dearness allowance and relief arrears and installments, a top official said on Monday.

As per the recommendations given in the presentation by the finance department on the impact of report of the 16th finance commission on the state's finances on Sunday, the RDG withdrawal may compel the state to take strict steps including abolition of posts lying vacant for the past two years, at least 30 per cent downsizing/closure of institutions and halting new pay commission and pay revision.

The presentation made by Principal Secretary Finance Devesh Kumar indicated that impact of loss of RDG can also result in abolition of subsidy given by the Himachal Road Transport Corporation (HRTC) and subsidy on ration, electricity, water and garbage bills.

However, these were just the recommendations given by the finance department and the final call would be taken by the state government.


The Chief Minister said that proposed withdrawal of RDG pegged at Rs 37,199 crore would significantly impact the annual budget of Himachal Pradesh as 12.7 percent of the state budget comes from the RDG.

The revenue of Himachal Pradesh including state's resources (Rs 18,000 crore), share in central taxes (Rs 13,950 crore) and borrowings (Rs 10,000 crore) is Rs 41,950 crore while the committed expenditure is Rs 48,000 crore and there is a gap of Rs 6,050 crore in the state revenue and expenditure.

The analysis of liabilities in the presentation further pointed out that state government will not be able to settle pay/pension revision arrears amounting to Rs 8,500 crore, Dearness allowances and relief amounting to Rs 5,000 crore and release further DA and DR installment.

It would also not be able to clear the pendency of Himcare and Sahara schemes and liability of Rs 1000 crore on account of court orders if the RDG is stopped.

Moreover, the state may be forced to migrate from the Old Pension Scheme (OPS) to the Unified Pension Scheme (UPS) to unlock the Rs 1,800 crore additional borrowing currently blocked by the Centre after restoration of the OPS.