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Himachal Pradesh will implement a land revenue cess on hydropower projects effective January 1, 2026, as per amendments to the Land Revenue Act. This move aims to generate funds amid heightened financial pressures due to a reduction in revenue deficit grants (RDG).

The state government's notification, issued on December 12, 2025, has faced backlash, particularly from Punjab, citing a potential annual financial burden of Rs 200 crore. Punjab's water resources minister criticized the cess as illegal.

Additionally, a new Rs 2 per unit electricity cess on commercial banks and insurance firms is expected to further support state revenue. Himachal's financial status has been strained, with a debt-to-GSDP ratio of 43.98% and projected fiscal deficits. The cabinet plans to discuss the implications of the cess and RDG abolition in upcoming meetings.