Uttarakhand CM Dhami Presents State’s Case Before 16th Finance Commission, Seeks Compensation For Eco-Service Costs
Dhami urged the Commission to increase the weight for forest cover in the tax-transfer formula by 20%
Uttarakhand Chief Minister Pushkar Singh Dhami on Monday made a comprehensive presentation before the Chairman of the 16th Finance Commission, Dr. Arvind Panagariya, and Commission members, detailing the state’s financial position, developmental needs, and challenges, with a strong pitch for fair compensation under the spirit of “Environmental Federalism.”
Welcoming the Finance Commission team to Devbhoomi in the silver jubilee year of the state’s formation, CM Dhami highlighted the need to account for Uttarakhand’s “eco-service cost” due to over 70% forest cover. He urged the Commission to increase the weight for forest cover in the tax-transfer formula by 20% and also recommended special grants for forest conservation and management.
The CM noted that despite significant progress in financial and development indicators — including a budget size crossing ₹1 lakh crore, a 4.4% drop in unemployment, and an 11.33% increase in per capita income — the state still bears high capital and maintenance costs due to its mountainous geography.
He expressed concern about the end of the Industrial Concessional Package in 2010, which made it harder to overcome locational disadvantages, particularly affecting private sector participation in health and education in hilly areas. Special provisions are being made to strengthen these sectors through smart classes, telemedicine, and cluster schools.
On the disaster front, CM Dhami underscored Uttarakhand’s vulnerability to natural calamities, requesting continued financial support for disaster management and for innovative efforts like the ‘Bhagirath App’ aimed at water source revival.
The CM also raised the issue of restrictions on hydroelectric projects following the declaration of the Ganga as a national river, leading to revenue and employment losses. He demanded appropriate compensation mechanisms for affected hydro projects.
Highlighting the burden from the floating population visiting religious sites, CM Dhami called for special infrastructure support for transport, healthcare, waste management, and water supply — all of which are more expensive due to complex terrain.
Further, he recommended incorporating fiscal discipline and “Revenue Need Grant” instead of “Revenue Deficit Grant” in the tax devolution formula, while also noting the state’s low credit-deposit ratio.
In response, Dr. Arvind Panagariya praised Uttarakhand’s achievements in income growth and unemployment reduction, and assured the delegation that the unique challenges of hill states would be seriously considered. He reaffirmed that the Finance Commission’s report would be submitted to the Centre by October 31, 2025.
Finance Secretary Dilip Jawalkar gave a detailed presentation on the state’s financial challenges. Also present were Chief Secretary Anand Bardhan, Principal Secretary R.K. Sudhanshu, and other senior officials.
