CPI(M) seeks greater financial support from the 16th Finance Commission for Himachal Pradesh

The Communist Party of India (Marxist) Himachal Pradesh State Committee has submitted a detailed note to the 16th Finance Commission, outlining the state’s unique challenges and the need for increased financial devolution. Himachal Pradesh, spanning 55,673 sq. km. with 67% forest land, faces significant restrictions on revenue generation due to central government policies like the Forest Conservation Act. The state’s dependence on central grants and loans is high, exacerbated by a ban on green felling that has reduced forest revenue since 1998. These forests serve critical ecological functions, including carbon sequestration and watershed benefits for neighboring states, justifying the state’s call for greater financial support.

The note highlights the state’s advancements in literacy and healthcare but underscores persistent urban-rural disparities. Infrastructure development has lagged, impacting agricultural efficiency and economic growth. The lack of railway infrastructure particularly hinders access to markets. Himachal Pradesh’s agricultural sector, dominated by small-scale farms, struggles with high production costs and significant post-harvest losses due to inadequate infrastructure.

Migrant labor, crucial to the state’s sectors like farming, construction, and tourism, adds pressure on infrastructure and finances, necessitating additional funds for development. The state’s vulnerability to natural disasters, such as landslides and flash floods, demands urgent and substantial financial support for restoration efforts. Recent years have seen catastrophic losses from natural disasters, emphasizing the need for significant financial aid.

The note also addresses historical injustices in revenue shares from joint assets under the Punjab Re-organization Act of 1966 and calls for rectification by the Finance Commission. The CPI(M) urges the 16th Finance Commission to consider Himachal Pradesh’s challenging conditions and economic structure in its financial devolution formula, advocating for sustainable development initiatives to ensure long-term growth and stability.

Some of the key points that were discussed are as follows :

• The overall forest area is very high (67% overall and more than 90% in some districts like Kullu), making development projects and service delivery more challenging.
• Himachal has a relatively low population share within the country, the state’s vast and sparsely populated areas present challenges that demand substantial
  human and financial resources to ensure service delivery to its people.
• Himachal’s unique geography, demographic specificities, and challenging climate create significant difficulties in service implementation, necessitating increased
  financial devolution.
• The per capita income may appear higher due to the inclusion of income from the secondary and tertiary sectors. In reality, 63% of the workforce earns income
  from the primary sector, which contributes only 14% to the GSDP.
• The state’s limited industrial base and constraints in exploiting natural resources hinder its revenue generation, challenging financial independence and funding for essential services. Increased financial allocation would help address these shortfalls, supporting economic diversification, industrial infrastructure, and skill development for sustainable growth.

Ex MLA Rakesh Singha, Dr Kuldip Singh Tanwar & Former Mayor Sanjay Chauhan represented the CPI(M) delegation at Peter Hoff Shimla