The favourable recommendations of the 15th Finance Commission, granting Rs 11,431 crore as the annual revenue deficit grant for 2020-21, to Himachal have come as a major relief, considering the grim financial health of the state.
In the commission report, Himachal will receive the highest revenue deficit grant in the country after Kerala which will be given Rs 15,323 crore.
It will help the Jai Ram government in taking care of its expenses like footing the huge salary and pension bill and for various development schemes.
The high-level delegation, led by its Chairman NK Singh, visited Himachal on a three day tour on September 27, 2018. None of the neighbouring states like Punjab, Haryana or Uttarakhand will receive such a huge grant. While Punjab has been recommended Rs 7,659 crore, Uttarakhand Rs 5,076 crore.
The projected annual growth rate of comparable GSDP for Himachal has been put at 10.3 per cent for 2020-21 as compared to 9.3 per cent for 2019-20. A grant of Rs 207 crore will also be made for urban local bodies.
The commission has also restored the budgetary allocation to zila parishads and block development committees (BDC), which had been stopped by the previous Finance Commission. During the last five years, the direct budgetary allocation was being made only to panchayats.
There has also been a hike of almost 40 per cent in the disaster relief fund being provided by the Centre. Sources in the government said this would rake in an additional amount of almost Rs 450 crore to Himachal.
In a major decision, which will go a long way in helping Himachal, is the enhancement in the weightage given to states for protecting forest and ecology. There are six major factors – area, population, income distance, demographic performance and tax effort, besides forest and ecology. In case of Himachal, this too has been enhanced from 7.5 per cent to10 per cent.
Forest cover was used as a criterion in the devolution formula for the first time by the 14th commission on the grounds that while the forest cover maintained by states provide ecological benefits, it also imposes opportunity costs that need to be compensated.