Himachal Pradesh’s legislative calendar was upended as Governor Shiv Pratap Shukla delivered an unusually brief address to the Assembly, curtailing the customary full reading of the speech prepared by the state government on the opening day of the Budget Session. Instead of delivering a detailed outline of fiscal and policy priorities, Shukla confined his remarks to the introductory paragraphs, bringing a document that spanned 50 pages to a close in less than three minutes and placing the full text on the House table without reading it aloud. The abrupt departure from tradition was rooted in a sharp dispute over the content related to the Revenue Deficit Grant, a long-standing financial mechanism aimed at assisting states with limited revenue bases. Sections of the prepared address, particularly those addressing the implications of the 16th Finance Commission’s recommendation to discontinue the grant, were omitted from the spoken remarks after the Governor objected that the text contained characterisations of constitutional institutions that he was unwilling to read in the House.
Shukla’s formal welcome to the Assembly underscored the purpose of the session – to consider supplementary demands for grants for the current fiscal year, present the Budget for 2026–27 and transact other legislative business – but he refrained from elaborating on the substantive challenges noted in the written speech, which was later circulated to members and the media.
The omitted passages had focused on the withdrawal of the Revenue Deficit Grant, highlighting that the provision under Article 275 of the Constitution had historically been extended to states like Himachal Pradesh to bridge the gap between revenue receipts and essential expenditures. The 16th Finance Commission’s decision to discontinue the grant for the forthcoming five-year cycle has ignited political tensions, particularly in smaller and hill states where resource mobilisation is constrained by geography and limited industrial bases.
Chief Minister Sukhvinder Singh Sukhu responded to the Governor’s decision by framing it as not without precedent, noting that governors have omitted portions of their addresses in the past. Sukhu emphasised that the present controversy is fundamentally about protecting the financial entitlements of Himachal Pradesh rather than seeking favours from the central government. “This is not about the government; RDG is our right. We are not asking for any charity. Do not harm the rights of the state,” he asserted in remarks after the session’s opening.
Sukhu also underscored the unique fiscal challenges faced by the hill state, distinguishing Himachal Pradesh’s revenue-generating capacity from larger, more economically diversified states. He argued that comparisons with other states that have had their grant allocations adjusted overlook the structural disadvantages that small hill states encounter, including higher costs for infrastructure development and disaster management.
The controversy over RDG has catalysed a three-day Assembly session under Rule 102, specifically called to enable legislative debate on the financial implications for the state. Sukhu appealed to opposition legislators, urging them to transcend party lines in advocating with the central government for the restoration of what his administration characterises as a constitutional right rather than a discretionary grant.
Opposition voices have seized on the unfolding standoff to broaden their critique, with the Bharatiya Janata Party levelling allegations of fiscal mismanagement against the state government. During a recent all-party meeting, BJP leaders asserted that the RDG phase-out was consistent with Finance Commission recommendations and pressed the Congress-led administration to prioritise measures to enhance revenue and strengthen fiscal discipline.
Beyond the immediate legislative row, the broader fiscal implications are profound. Analyses of the state’s budgetary projections indicate that the loss of the Revenue Deficit Grant could translate into an annual shortfall of several thousand crore rupees, exacerbating pressures on expenditure commitments such as salaries, pensions and essential services. The state government has maintained its commitment to welfare schemes, including the Old Pension Scheme and healthcare initiatives, even as it navigates the potential budgetary constraints.