‘Himalayan States Must be Compensated’: Former Civil Servants Write to 16th Finance Commission

New Delhi: The Constitutional Conduct Group (CCG) has written to the chairman of the 16th Finance Commission to raise the issue of rising global warming and climate change affecting the Himalayan states in northern India, asking the Union government and the Commission to “recognise the real wealth and contribution of these states to the national economy and well-being, and compensate them accordingly.”

“Himalayan states like Himachal, Uttarakhand, Kashmir and Sikkim are slowly going to pieces, literally, under the onslaught of cloudbursts, flash floods, land subsidence and collapsing infrastructure,” said the letter signed by a group of 103 former civil servants, further underscoring the financial losses these states are going through because of the environmental disasters.

“Himalayan states suffer from a double whammy: on the one hand they are revenue deficit because they have limited sources of income… On the other hand, the cost of providing basic development to the people is much higher than that of the plains because of topographical, connectivity and climatic reasons. The only low hanging source of income they have are their natural resources – the forests and rivers – and these are therefore being exploited ruthlessly for hydel projects and tourism, causing immense damage to the ecology, and resulting in the death and destruction we have been witnessing in the last few years,” the letter stated.

The CCG demanded that “Himachal (and other Himalayan states) must be compensated by the central government for their non-monetary, but vital, contribution to the country's wellbeing, quality of life and in sectors like agriculture, climate control, hydel power, carbon capture and tourism”. 

It noted that the Finance Commissions, which determine the formula for devolving central funds to the states, can be used to do so. The idea, it added, must be amplified and taken forward by the 16th Financial Commission. 

“If the Himalayas lose their forests, rivers and glaciers it won't be long before north India goes the way of the Indus Valley civilisation,” the CCG said.

Read the full letter below:

CCG LETTER TO THE CHAIRMAN, 16TH FINANCE COMMISSION

3 November 2025

To

Dr. Arvind Panagariya

Chairman, 16th Finance Commission

Cc: Members of the Finance Commission

       Secretary, Finance Commission

Dear Dr. Panagariya,

We are a group of former civil servants who have worked with the central and state governments and have come together as the Constitutional Conduct Group to speak out on actions of the governments which we consider are against the interests of the people of India and/or in violation of the Indian Constitution. We are not affiliated to any political party, individually or collectively.

2. The 16th Finance Commission, which you head, is in the midst of interacting with various state governments and formulating its recommendations for the devolution of funds from the Centre to the states. We feel that this is an appropriate time to bring to your notice a vital issue concerning the environmental integrity and very survival of some of our northern states, which has not received the attention it merits in this era of global warming and climate change. Previous Finance Commissions have, at best, made only a passing mention of it, but it now deserves to be brought to the forefront of your deliberations.
3. Himalayan states like Himachal, Uttarakhand, Kashmir and Sikkim are slowly going to pieces, literally, under the onslaught of cloudbursts, flash floods, land subsidence and collapsing infrastructure. In just the last four years (2022-2025) Himachal has lost 1200 lives and suffered a loss of ₹18000 crores in these disasters (and this does not include the indirect loss to trade and economic activities). The position of Uttarakhand is even more dire: in just the last ten years (as of 2022) it has recorded 18464 “natural disasters” in which 3554 lives were lost (not including the colossal number of deaths in the Kedarnath disaster of 2013). We have not been able to lay our hands on the total financial/economic loss caused, but an indication is available in the official figures of the Kedarnath calamity: US$ 3.8 billion. Just this year, 2025, the economic losses are estimated at ₹5000 crores.                                                                                                                                                                 Whether these are natural disasters, as the central and state governments would like us to believe, or man-made disasters, is debatable; but we are not delving into that aspect for now. We are on a larger and more fundamental point: can the country afford the destruction of the Himalayas and do these Himalayan states need help? 
4. North India and its Gangetic plain would not survive without the forests, the glaciers and  rivers that originate from Himachal, Kashmir and Uttarakhand, and would soon become a desert: these rivers sustain a population of almost 400 million people and are a lifeline for many cities. The Himalaya Hindukush  ranges help to moderate the climate, enable the monsoon precipitation and snow that recharge the rivers every year. They contain some of Hinduism's most revered religious shrines and pilgrimages. They are the green lungs which enable north India to breathe and provide relief to 40 million tourists every year. We cannot afford to lose this landscape.
5. But losing them we are, mainly because of financial compulsions. Himalayan states  suffer from a double whammy: on the one hand they are revenue deficit because they have limited sources of income. They have no industrial or manufacturing base, services sector or surplus agriculture (other than some fruit crops), employment creation potential is limited. On the other hand, the cost of providing basic development to the people is much higher than that of the plains because of topographical, connectivity and climatic reasons. The only low hanging source of income they have are their natural resources – the forests and rivers – and these are therefore being exploited ruthlessly for hydel projects and tourism, causing immense damage to the ecology, and resulting in the death and destruction we have been witnessing in the last few years (Himachal and Uttarakhand have diverted 11000  and 50000 hectares, respectively, of dense forests for various non-forestry projects in the last 20 years alone). According to successive State of the Forest Reports the denudation of forests in the north-eastern Himalayan states is even more severe. The disastrous, and predictable, consequences of the  depletion of green cover is being further exacerbated by climate change which is drastically altering the hydrology of the rivers, accelerating glacial melt and the threat of GLOF (Glacial Lake Outburst Flood). The increased incidence of EWEs (Extreme Weather Events), landslides, flash floods, land subsidence is, according to the available science, directly attributable to this combination of over-development and climate change. This reckless squandering of their natural assets must be stopped in the national interest.
6. The irony, and tragedy, is that this need not be a zero-sum game, if only the central government and Finance Commissions were to recognise the real wealth and contribution of these states to the national economy and well-being, and compensate them accordingly. According to a 2025 report of the Institute of Forest Management, Bhopal, the total forest wealth of Himachal was valued at ₹9.95 lakh crores. The report calculated the annual Total Economic Value (TEV) of Himachal's forests at ₹3.20 lakh crores; this includes ₹1.65 lakh crores for carbon sequestration, ₹68941 crores for eco-system services, ₹32901 crores as the value of bio-diversity, ₹15132 crores for water provisioning and ₹3000 crores for regulatory services such as flood control and sediment retention . We are not aware if the other Himalayan states have carried out similar surveys but they would be on similar lines. These contributions benefit the whole nation, not just these states. Unfortunately, these  are neither acknowledged nor taken into account while disbursing central assistance to the states.
7. But this must change. Himachal (and other Himalayan states) must be compensated by the central government for their non-monetary, but vital, contribution to the country's wellbeing, quality of life and in sectors like agriculture, climate control, hydel power, carbon capture and tourism. The mechanism to do so already exists – the Finance Commissions, which determine the formula for devolving central funds to the states. A beginning was made by the 12th Finance Commission which allocated a total of ₹1000 crores for this purpose, which was termed a Green Bonus; the share of Himachal was a paltry ₹20 crores.
8. This idea must be amplified and taken forward by the 16th FC. We learn that the Himachal Chief Minister has taken up this matter of the creation of a  Green Fund or Green Bonus with you on the 6th of June 2025, requesting for an outlay of ₹50000 crores for incentivising the mountain states. This proposal must be considered seriously; the additional devolutions would go a long way towards ameliorating their financial condition and removing their present compulsion to ruthlessly exploit their forest and ecological capital to meet budget deficits and development expenditure.
9. In this regard, we would like to make two methodology- related suggestions for your consideration:

[1] The current (15th FC) weightage given for Forests and Ecological services is only 10%. This is wholly inadequate considering the imperatives of climate control goals and only disincentivises states from bringing more area under green cover. This weightage needs to be increased to at least 20%; the additional 10% can be located by reducing the weightages for some of the other indicators. For example, weightage for Population should be brought down from 15% to 10% as there is a contradictory logic in allocating a higher weightage for population than for Demographic Performance (currently 12.5 %). Similarly, the weightage for Income Distance could be reduced to 35% from the current 45% (which penalises states with higher per capita incomes).

[2] The present methodology for calculating the area under Forests and Ecology is faulty and disadvantages the mountain states insofar as it excludes the area above the tree line. Much of their geographical area lies above the tree line and comprises of snowfields, alpine pastures and glaciers. These areas are vital natural habitats for many rare and endangered species of animals and have a unique ecological value. They also function as the “water towers” that charge the river. Denying them their ecological value in the weightage matrix is illogical and self-contradictory. These areas should be included in the definition of forests.                                                                                                                                      

10. We are strongly of the view, however, that the Himalayan states should not be given a free pass with the Green Bonus as finally decided by the Commission. Release of these funds should be indexed to improvement in environmental parameters, sustainability of development and tourism projects, protection of rivers, framing of proper urban development and building plans, and curbing of illegal mining and construction. You would no doubt be aware that the Supreme Court too has taken serious note of the  environmental devastation in Himachal Pradesh and has said that at this rate the state would "vanish from the map of India".                                        
11. We earnestly hope that your Commission too shares this concern and would also play a role in ensuring that the Court’s fears do not come true. Protecting the Himalayas has to be seen as a shared responsibility, not as the concern of the mountain states alone. If the Himalayas lose their forests, rivers and glaciers it won't be long before north India goes the way of the Indus Valley civilisation.

SATYAMEVA JAYATE

With deep regards,

Yours sincerely,

Constitutional Conduct Group (103 signatories, at pages 4-7 below)

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