Prof. Prem Kumar Dhumal, Chief Minister emphasised that the Government of India needed to have a serious relook at its various policies which discriminate some of the States within the Special Category States as a result of which Himachal Pradesh was increasingly getting the feeling that it was being discriminated against and was paying the price for remaining a peaceful State which has gainfully utilized its limited resources for development. He was speaking in the National Development Council Meeting in New Delhi today which was presided over by the Prime Minister of India.

Chief Minister said that the withdrawal of industrial package under which excise duty exemption for setting up of industrial units in Special Category States was earlier due upto 31st March, 2013 for Himachal Pradesh and Uttarakhand has been curtailed by the Government of India to 31st March 2010 and added that such an exemption continues for the other Special Category States also. As per the figures of the Ministry of Finance, Government of India, the Credit-Deposit ratio in Himachal Pradesh was merely 40.7% as compared to the all India figure of 71.1% in December 2009. This reflects a significant flight of capital from Himachal Pradesh to other States in the country. The curtailment of excise duty exemption incentive will further adversely impact the credit-deposit ratio in the State, accentuate the regional imbalances and affect the State's growth in the coming years. He urged upon the Government of India to redress this legitimate grievance of the State on priority in the interest of growth and much needed industrial development in Himachal Pradesh.

Prof. Prem Kumar Dhumal said that another instance of such discrimination was the issue of having a uniform funding pattern for all Special Category States in respect of Centrally Sponsored Schemes i.e. a funding pattern of 90:10 between the Government of India and State Government. There was no logic of differentiating amongst the Special Category States in funding of Centrally Sponsored Schemes. As per the figures for 2009-10, if Government of India were to shift to 90% funding in all Centrally sponsored schemes for Himachal Pradesh, the additional impact for the year would have been only Rs. 159.85 crore i.e. less than 14% of the total provisioning by Government of India for these schemes during 2009-10.

Chief Minister said that Himachal Pradesh had also been getting less allocation of wheat and rice as compared to the other Special Category States. The Union Food Ministry was allocating only 21 kg foodgrains per month per APL family to our State as against the allocation of 35 kg foodgrains per month to each of such families in other Special Category States. Even though the State has 10.88 lakh APL ration cardholders, the Government of India has been releasing foodgrains

quota to the State on the basis of only 7.43 lakh cards. He reiterated the request for having a uniform norm in this regard so as to ensure an equitable distribution of foodgrains amongst the Special Category States.

Prof. Prem Kumar Dhumal said that normative approach followed by the 13th Finance Commission had totally overlooked the ground realities in Himachal Pradesh. While the Commission has recommended an overall increase of 126% to all the States compared to the transfers recommended by the 12th Finance Commission, unfortunately, for Himachal Pradesh the increase was only 50% which was the lowest as compared to any other State in the Country. The Commission has grossly under estimated the State's committed liabilities on account of salary, interest and pension payments. Not only this, the Commission has assumed an average annual rate of growth in salary expenditure of only about 2 % over the period 2010-15, whereas the actual expenditure was likely to be over 10% per annum. 13th Finance Commission award has put the State's finances in really precarious position and it would be difficult for the State to meet even committed liabilities.

He said that another Finance Commission recommendation was to cap the State Government's fiscal deficit at 3.5% of GSDP in 2010-11 and at 3% for the subsequent period upto 2014-15. Appreciate the Finance Commission's concern to cap the fiscal deficit at a sustainable level, he said that the fiscal deficit ceiling prescribed by it failed to take into account the requirements of the States like Himachal Pradesh, which had a very narrow resource base and was dependent on central transfers and borrowings. Given the fact that the State Government was yet to release the pay commission arrears to its employees meeting these fiscal deficit targets was unrealistic. Strict adherence to the prescribed for the State's borrowings for the period from 2010-11 to 2014-15 will also severely affect the State's ability to finance the coming years Annual Plans. Yet another recommendation of the Finance Commission is the linkage of release of State Specific Grants to the States to their adhering to fiscal deficit targets. These State Specific Grants should not have any nexus with fiscal deficit targets as has been the case with the previous Finance Commissions' recommendations, he added.

Prof. Prem Kumar Dhumal said that in view of the unrealistic and gross under estimation of the State's salary, interest and pension expenditure on the Non- Plan Account by the Thirteenth Finance Commission, special financial assistance may be given by the Government of India to Himachal Pradesh. The fiscal deficit ceiling of 3.5% for 2010-11 and 3% for four year period of 2011-15 may not be insisted upon for Himachal Pradesh. The State Specific Grants recommended by the thirteenth Finance Commission may be released without linking them to the meeting of fiscal deficit targets.

Chief Minister also requested for intervention of Prime Minister to develop the much needed railway infrastructure in Himachal Pradesh and to fund the State for establishing an airport in Himachal Pradesh at the earliest on the pattern of North Eastern regions and subsidising the operation of helicopter services in the State.

Chief Minister said that Himachal Pradesh was helping all down stream States with direct and indirect benefits of drinking and irrigation water, watershed functions of the forests, carbon sink and oxygen production, control of flow of silt etc. As per an estimate, the forest wealth of the State was valued at over Rs. 1.50 lakh crore. Scientific forest logging could yield revenues to the tune of Rs. Rs. 1000 crore per annum to the State. A substantial portion of the installed hydel capacity in the State is owned by the Central Government, and the benefit of these projects is shared by all States of the northern region. By retaining forest cover in the catchments of these projects, Himachal Pradesh was bearing the cost of ensuring their longevity.

He said that though the thirteenth Finance Commission has given a small grant for forest conservation activities in the State, this devolution was grossly inadequate. Special additional grants through Plan assistance/Central schemes in the form of Green Bonus needed to be given to Himalayan States which was playing an important role in protection of forests and the fragile Himalayan ecology, he added.

Chief Minister also urged for allowing the State to put generation tax on all electricity produced in the State at 10 paise per unit to help the State mobilise additional revenue of about Rs. 250 crore per annum. This proposal may be approved without any further delay, Chief Minister emphasised.

Chief Minister requested that the criteria for developing Mission City in States like Himachal Pradesh should be relaxed and more towns included as Mission Cities under the Scheme so that funding for development of projects and infrastructure investment becomes possible under JNNURM in such towns also.

Prof. Prem Kumar Dhumal said that Himachal Pradesh had been pressing for the creation of a Himachal Regiment in the army, a demand which unfortunately has not been agreed to by the Government of India. Till the creation of a Himachal Regiment, it was proposed that Himalayan Regiments may be created in the respective hill States which should comprise of the youth from the hill States like Himachal Pradesh, Uttrakhand, J&K and all other hill States who are well versed with the topography of these regions and are well acclimatized to meet with any such eventualities. Favourable consideration of this demand will help in furthering the strategic interests of the Country, he said.