Participating in the meeting of finance ministers of special category states in New Delhi today, Chief Minister Prem Kumar Dhumal informed that forest produce had been an important source of non-tax revenue in Himachal Pradesh. But since 1983, when the state government imposed a ban on green felling, the state had to lose its revenue. He asked the 11th Finance Commission to suggest modalities for compensating Himachal in lieu of lost forest revenue in order to continue the ban on the felling.

Dhumal reiterated that Himachal was conferred the status of full-fledged state not on financial considerations but to fulfill the democratic aspirations of the people. He said that need for special financial support and nurturing form the Centre was inherent in the rationale for the conferment of statehood to Himachal Pradesh.

Justifying the claim for special help, the Chief Minister said despite strenuous efforts made by the state in cutting down the non-plan expenditure and exploiting to the maximum possible extent the potential for revenue generation, the expenditure had grown due to committed liabilities in the nature of very high maintenance expenditure of capital assets, liability from the plan, interest payments, salary dearness allowance and impact of Fifth Pay Commission on revision of pay-scale. He urged the Finance Commission to adopt a liberal attitude for Central and other assistance for hill states like Himachal Pradesh and added that norms for it should be different from other states keeping in view the difficult geographical and weather conditions and higher cost of construction.

Dhumal explained that Himachal Pradesh was linked with Punjab for pay-scales to its employees and any hike in the pay-scale and other benefits by the Punjab Government had direct bearing on the state exchequer. Annual expenditure on pay and emoluments to government employees in the state exceeds Rs 1,400 crore per year. The Tenth Finance Commission erred in estimating the state's committed expenditure on salaries, wages and pensions which had continuously compounded the revenue deficit situation in Himachal Pradesh. He urged the finance commission to remove this anomaly while making its recommendations for bridging the resource gap due to this committed expenditure.

Regarding Central assistance to the special category states, Dhumal suggested that the pattern of Central assistance to these states should be 100 per cent grant instead of the existing 90 per cent grant and 10 per cent loan. He said Central loans used directly for non-productive purposes and loans for natural calamity should be written off as states find it increasing difficult to repay these loans due to increasing interest rate.