Dehradun: Chief Minister Pushkar Singh Dhami presented the state’s case in detail regarding financial conditions, challenges, and developmental needs during a meeting with the Chairman of the 16th Finance Commission, Dr. Arvind Panagariya, and other members at the Secretariat.
The Chief Minister requested appropriate compensation in the spirit of “Environmental Federalism” considering Uttarakhand’s “eco-service cost”. He also suggested that the weightage for forest cover in tax devolution be increased to 20 percent. He emphasized the need to consider special grants for proper forest management and conservation in the state.
In the special meeting aimed at establishing better financial coordination between the central and state governments, the Chief Minister welcomed Finance Commission Chairman Dr. Arvind Panagariya, members Ms. Annie George Mathew, Dr. Manoj Panda, Dr. Soumya Kanti Ghosh, Secretary Mr. Ritvik Pandey, and Joint Secretary Mr. K.K. Mishra to Devbhoomi Uttarakhand during the silver jubilee year of the state’s formation.
The Chief Minister stated that over the past 25 years, Uttarakhand has made remarkable progress in financial management, along with development in other sectors. After the formation of the state, Uttarakhand had to rely on external loans to develop basic infrastructure. While the state has achieved notable milestones on various development parameters, its budget size has crossed ₹1 lakh crore. According to the SDG Index Report 2023–24 issued by NITI Aayog, Uttarakhand has emerged as a leading state in achieving sustainable development goals. The state has recorded a 4.4% drop in the unemployment rate, and a 11.33% increase in per capita income, exceeding the national average.
The Chief Minister said that with over 70% of the state’s geographic area covered in forests, the state faces two major challenges: higher spending on forest conservation, and bearing the “eco-service cost” due to restrictions on development activities in forest areas. He request for suitable compensation, an increase in forest cover weightage in tax devolution to 20%, and special grants for forest management and conservation. Following the end of the “Industrial Concessional Package” in 2010, the state has faced difficulties in overcoming “locational disadvantages.” Due to difficult terrain and other practical challenges, private sector participation in critical sectors like education and healthcare in hilly areas remains limited. Hence, special budget allocations are necessary for these regions. Efforts are being made to deliver quality education at low cost through smart classes, cluster schools, and distance learning. Similarly, telemedicine, specialized ambulance services, and the availability of specialist doctors are being ensured to strengthen healthcare.
The Chief Minister emphasized that Uttarakhand is extremely vulnerable to natural disasters, and continuous financial support is required to deal with these disasters and for relief and rehabilitation efforts. He highlighted the “Bhagirath App” launched to ensure public participation in water conservation and requested that the state’s unique efforts to rejuvenate water sources through the SARA initiative be considered for special grants.
He also mentioned that due to the regulations implemented after the Ganga was declared a national river, the potential for hydropower generation in Uttarakhand has been limited. Hydropower, for various reasons, is not contributing as expected to the state’s economy, affecting both revenue and employment. He requested the determination of **compensation mechanisms for affected projects.
He further noted that due to the floating population visiting religious sites, there is a need to develop additional infrastructure for transportation, drinking water, healthcare, waste management, and other services. Given the complex geography, infrastructure development in the state incurs higher costs, and thus special assistance should be provided.
The Chief Minister suggested that in the tax devolution formula, along with tax effort, “fiscal discipline” should also be included as a component. Instead of “Revenue Deficit Grant,” a “Revenue Need Grant” should be implemented. He pointed out that due to the three-dimensional geography of the state, both capital and maintenance expenditures are higher. The credit-deposit ratio in the state is also low.
Chairman of the 16th Finance Commission, Dr. Arvind Panagariya, acknowledged that Uttarakhand is making rapid progress in every sector. He noted the increase in per capita income and appreciated the state’s efforts to reduce unemployment. He assured thatcomprehensive discussions will be held to address the challenges faced by Uttarakhand and other hill states due to difficult geographic conditions. He said the 16th Finance Commission aims to submit its report to the Central Government by October 31, 2025.
On this occasion, Finance Secretary Dilip Jawalkar gave a detailed presentation on the various challenges faced by the state. The meeting was attended by Chief Secretary Mr. Anand Bardhan, Principal Secretaries Mr. R.K. Sudhanshu, Mr. L. Fanai, Mr. R. Meenakshi Sundaram, and other Secretaries and Additional Secretaries.
