Himachal Pradesh has renewed its demand for a dedicated ₹50,000-crore Green Fund from the Centre ahead of the Union Budget 2026, citing repeated natural disasters, ecological stress and the state’s role as one of India’s key environmental buffers.
Cash-strapped Himachal Pradesh, the only Congress-ruled state in north India, has been urging the Union government to create a special fund for hill states, which it describes as the country’s “green frontiers.” The state has faced frequent cloudbursts, flash floods and landslides in recent years, intensifying the need for sustained investment in climate resilience and ecological protection.
CM Sukhu Raises Demand With PM and Finance Minister
Chief Minister Sukhvinder Singh Sukhu said he has personally raised the proposal with Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman and has also taken the matter to the NITI Aayog. He said the state has suggested an annual allocation of ₹50,000 crore for all hill states to support conservation, disaster mitigation and sustainable development.
Sukhu also pressed for changes in the horizontal devolution formula used by the Centre, seeking greater weightage for forest and ecological criteria. He said cold desert areas above the tree line should be included along with dense forest regions because of their ecological interdependence.
Hill States Provide Critical Ecological Services
The Chief Minister said Himachal Pradesh provides vital ecological services to the country, including clean air, water security, soil conservation and climate regulation. He argued that these contributions are not adequately reflected in existing fiscal arrangements, even as the state bears the economic cost of protecting fragile ecosystems.
Referring to the increasing frequency of extreme weather events during recent monsoons, Sukhu said hill states require special policy attention to cope with the growing impacts of climate change.
Forest Value Estimated at ₹1.65 Lakh Crore
Citing a study by the Indian Institute of Forest Management, Bhopal, Sukhu said Himachal’s forests absorb large volumes of carbon dioxide and play a major role in meeting India’s climate commitments. The study estimates the state’s carbon sequestration and climate regulation value at around ₹1.65 lakh crore.
The state has repeatedly sought a higher share of central funds to invest in climate-resilient infrastructure and environmentally sensitive development projects.
Push for Green Energy and Hydrogen
Sukhu said the government is committed to making Himachal a “Natural and Green State,” with sustainability at the core of development across sectors such as agriculture, horticulture, transport and industry. He said the state aims to reduce dependence on polluting services while expanding clean alternatives.
He also announced that Himachal is moving towards green hydrogen production, with a 1 MW green hydrogen plant being set up in Solan district in collaboration with Oil India Limited. The Chief Minister said if the state meets nearly 90 per cent of its energy needs through renewable sources, it can truly position itself as a green state.
Scientific Assessment of Ecological Contribution Planned
The Chief Minister said the state will launch a technical and scientific assessment of Himachal Pradesh’s ecological contribution to the nation. Preliminary estimates suggest this contribution could be valued at nearly ₹90,000 crore annually, if formally recognised.
In November 2025, a group of retired bureaucrats under the Constitutional Conduct Group submitted a memorandum to the 16th Finance Commission, supporting the idea of a “green bonus” for Himalayan states such as Himachal Pradesh, Uttarakhand, Sikkim and Jammu and Kashmir, arguing that current fiscal formulas fail to account for their environmental responsibilities.