Why India should pay hill states a 'green bonus' for its forest—based on its conservation results
Mint - Opinion · Published 9 November 2026 · Last updated
Himachal Pradesh's severe fiscal crisis driven by mounting salary, pension, and power subsidy liabilities highlights the urgent need to balance structural spending reforms with a performance-based central 'green bonus' for forest conservation.
Key points
- On 8 September, Himachal Pradesh chief minister Sukhvinder Singh Sukhu requested central finance minister Nirmala Sitharaman to expand the state's yearly borrowing cap from 3% to 4% of its gross state domestic product (GSDP).
- The 15th Finance Commission allotted ₹37,199 crore to Himachal Pradesh as a revenue deficit grant for 2021-26, but the yearly sum decreased to ₹3,257 crore by 2025-26.
- The 16th Finance Commission report recommended no revenue deficit grants to any state for 2026-31, arguing that such expectations encourage careless spending.
- Himachal Pradesh's 2026-27 budget expects about ₹4,200 crore less from New Delhi than last year's estimate, forcing the state government to shrink its budget by ₹3,586 crore.
- According to PRS Legislative Research, of every ₹100 of state revenue, ₹41 goes on salaries, ₹29 on pensions, and ₹18 on debt interest, leaving only ₹12 for all other services.
- The Comptroller and Auditor General (CAG) records that 68% of Himachal Pradesh is legally classified as forest, while actual forest cover is about 28% of its area.
- The Supreme Court warned in July 2025 that the entire state of Himachal Pradesh might vanish in thin air from the map of the country if current environmental destruction trends continue.
- The 16th Finance Commission assigned a 10% weight to forests in its tax-sharing formula, raising Himachal Pradesh's share marginally from 0.83% to 0.91%.
- Himachal Pradesh's power subsidy more than tripled between 2018-19 and 2024-25 to ₹1,936 crore, driven by political promises including free electricity up to 125 units announced by the Bharatiya Janata Party (BJP) government in April 2022.
- The Congress government approved bringing back the old pension scheme in January 2023 for over 1.36 lakh employees and pensioners, a scheme Reserve Bank of India (RBI) economists estimated could cost states up to 4.5 times as much over time.
Background
- In April 2022, the BJP government of Jai Ram Thakur promised zero electricity bills to homes using up to 125 units months ahead of assembly elections.
- In January 2023, the newly elected Congress government approved restoring the old pension scheme for employees and pensioners.
- In 2023, Reserve Bank of India (RBI) economists estimated the long-term fiscal multiplier costs of returning to the old pension scheme.
- In July 2025, the Supreme Court issued strict warnings regarding the fragile ecological carrying capacity and survival risks facing Himachal Pradesh.
- In 2024, the Sukhu government rolled back free power subsidies for income-tax payers and later restricted them further in April for usage between 125 and 300 units.
Prelims facts and Mains angle for this issue are in the full SWAदेSH note.
Original report: Mint - Opinion