Himachal Pradesh Chief Minister Virbhadra Singh has urged the 14th Finance Commission to provide Rs 12,466 crore as special grant for the State.
The grant includes Rs 1,430 crore for forest wealth management, Rs 4,750 crore for revenue foregone from forests, Rs 2,521 crore for preparedness of disaster management, Rs 1,425 crore for local bodies and Rs 2,340 crore for State specific grants. The Chief Minister said that intangible benefits from forests needed to be quantified as was being done in some parts of the world. He emphasized that the cost of conservation of ecosystem was being borne by the State, while benefit were accrued to the nation as whole.
He said that the indirect benefits from the forest wealth of Himachal were about Rs 99,000 crore and the revenue foregone for being unable to remove forest as per working plan was over Rs 22, 900 crore for six year period. He also requested the Commission that the state must be compensated for the intangible benefits accruing to the nation and the loss of revenue to the state on the restrictions imposed on removal of forests.
Singh disclosed to the Commission that over 95 per cent of the total 23000 MW exploitable hydro power capacity available in the state had been allocated and the upfront premium received in this respect. The per unit sale rate of power has come down from Rs 7 to about Rs 2-3 per unit. This has dampened the interest of the independent power producers who have been allotted power projects; besides they are unable to attain financial closure, he added.
Urging the Commission, Singh asked to recommend to the Central Government to permit Himachal Pradesh to levy generation tax on hydropower produced within the State. He added that being a hilly state with difficult geo-graphical and topographical conditions, cost of construction and maintenance of capital assets like roads, health and educational institution, irrigation and water supply schemes were much higher in Himachal Pradesh.
“Unlike other States, where repairs of these capital assets require maintenance only once after monsoon season, in Himachal Pradesh maintenance of capital assets has to be carried out twice every year, once after the rainy season and subsequently after the snowfall, he added. About 87 percent of the farmers in the state were small and marginal farmers, per unit yields was much less than the national averages; and net return from activities in agriculture and allied sectors due to high cost of production, labour, transportation and remoteness of the markets were very little, he explained.
Singh also said that withdrawal of industrial package by Central Government even before the expiry date under pressure from the neighbouring states have significantly reduced the tax and non-tax base. The conventional taxes have reached a saturation level. The Chief Minister requested that committed liabilities on salary, pension, interest and other committed liabilities should be accepted on the basis of calculation and may not be arrived at on normative basis.
The debt liabilities of the state were 39.18 percent of GSDP and were almost double of all states average of 20.55 percent. He requested the Commission to consider the state’s debt stress and bail the state out of its financial situation through an appropriate intervention. Chairman 14th Finance commission Padam Vibhushan Dr Y Venugopal Reddy said that the state government should come out with specific strategies to meet out the emerging challenges due to high debt liabilities.
He added that the State should judiciously utilize its resources and save more for the committed liabilities.