The 16FC report has profound implications for Uttarakhand. As a “Special Category State” with an incredibly high multi-hazard profile, Uttarakhand has secured a massive boost in Disaster Resilience funding. However, the state is bracing for a “fiscal winter” due to the nationwide scrapping of the Post-Devolution Revenue Deficit Grant (PDRDG).
Here is the detailed “State-Specific Summary” for Uttarakhand‘s gains and losses.
1. The Disaster Management “Gain” (₹2,912 Crore)
Uttarakhand has emerged as a major focus area for 16FC due to its recurring cloudbursts, GLOFs (Glacial Lake Outburst Floods), and seismic vulnerability (Zone VI).
| Fund Category | Total Allocation (₹ Crore) | Union Share (90%) |
State Share (10%)
|
| SDRF (Response & Recovery) | 2,330 | 2,097 | 233 |
| SDMF (Mitigation) | 582 | 524 | 58 |
| Total Five-Year Corpus | 2,912 | 2,621 | 291 |
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The “Mitigation Surge”: The ₹582 Crore SDMF allocation is a dedicated war chest. Unlike previous years, these funds cannot be diverted; they must be used for projects like stabilizing slopes along the Char Dham route and early warning systems.
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The 90:10 Shield: Uttarakhand retains its favored 90:10 cost-sharing ratio, ensuring that the heavy financial burden of Himalayan resilience is primarily borne by the Union.
2. The “Loss of the Safety Net”: End of Revenue Deficit Grants
The 16FC has adopted a strict “Fiscal Discipline” stance, discontinuing the Revenue Deficit Grant (RDG) for all states, including Uttarakhand.
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The Crisis: Uttarakhand has historically relied on the RDG (which was nearly ₹7,000 Crore under the 15FC) to pay for its massive committed expenditure (salaries for mountain-post employees, pensions, and interest payments).
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The Impact: The state must now “earn its keep.” The 16FC argues that RDG incentivized states to stay in deficit. For Uttarakhand, this means a potential shortfall of ₹1,200–₹1,500 Crore annually in its revenue account.
3. Horizontal Devolution: The “Forest & GDP” Shift
The 16FC has rewritten the formula for how the divisible pool of central taxes (41%) is shared between states.
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Forest & Ecology (The Gain): Uttarakhand’s huge forest cover remains a strong asset. The 16FC has expanded the definition of “Forest” to include Open Forests, which benefits Uttarakhand significantly.
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Contribution to GDP (The New Challenge): The 15FC rewarded “Tax Effort.” The 16FC rewards Contribution to GDP. For a state like Uttarakhand, where the rugged terrain limits large-scale industrial GDP growth, this could slightly suppress the growth of its share compared to high-GDP states like Maharashtra or Tamil Nadu.
4. Local Body Empowerment (₹4,120 Crore)
Uttarakhand has received a robust allocation for its local governance tiers, specifically targeting the “Border Villages”initiative.
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Panchayats (Rural): ₹3,640 Crore.
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Urban Bodies (ULBs): ₹480 Crore.
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Conditionality: 20% of this is “Performance-Linked.” Uttarakhand’s hill municipalities must now digitally track property taxes and solid waste management to unlock these funds.
Summary Table: The Net Impact for Uttarakhand
| Parameter | Under 15FC (2021-26) | Under 16FC (2026-31) | Verdict |
| Disaster Funding | ~₹ 2,400 Cr | ₹ 2,912 Cr |
GAIN (+₹ 512 Cr)
|
| Revenue Deficit Grant | High (~₹ 7,000 Cr) | ZERO | SEVERE LOSS |
| Forest Weightage | 10% (Dense) | 10% (Dense + Open) |
GAIN (Expanded Scope)
|
| Local Body Grants | ~₹ 3,500 Cr | ₹ 4,120 Cr |
GAIN (+₹ 620 Cr)
|
The devastating 2013 Kedarnath tragedy and the recent subsidence at Joshimath warn us that Uttarakhand’s geography is a liability that no fiscal formula can fully capture.
These past events tell us that while the increased ₹2,912 Crore Disaster Corpus is a triumph of policy, the removal of the Revenue Deficit Grant is a “surgical strike” on our administrative stability. Our ongoing initiatives in ‘Performance-Based Urbanization’ and ‘Forest-Asset Monetization’ prove we are adapting, but history warns us that if we do not turn our ‘Environmental Services’ into a revenue stream today, we will be forced into unsustainable developmental shortcuts tomorrow.
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