Syllabus:

GS-2: Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein. 

GS-3: Conservation, environmental pollution and degradation, environmental impact assessment 

Context: A group of former bureaucrats has urged the 16th Finance Commission Chairman to grant a ‘green bonus’ to Himalayan states, stating that Himachal Pradesh, Uttarakhand, Jammu & Kashmir, and Sikkim suffer heavy losses from frequent extreme weather events.

More on the News

• The aim is to draw the Commission’s attention to the losses incurred by Himachal Pradesh, Uttarakhand, Jammu and Kashmir, and Sikkim due to frequent extreme weather events (EWEs).
• The letter stated that the Himalayan states must be compensated by the Central government for their non-monetary but vital contribution to the country’s well-being, quality of life, and sectors such as agriculture, climate control, hydropower, carbon capture, and tourism. 

About Green Bonus

• The Green Bonus refers to special central financial assistance or weightage in the formula for sharing central funds with states in recognition of their maintenance of forests and provision of vital ecological services.
• The 12th Finance Commission initiated this process, allocating ₹1,000 crore nationwide, but actual disbursement (e.g. ₹20 crore to Himachal) has been meagre relative to the ecological contribution.

Key Proposals

• Increase Ecosystem Weightage: Raise the forest/ecosystem share in Finance Commission devolutions from 10% to at least 20%, adjusting population and income-gap weightage to maintain balance.
• Redefine Ecologically Valuable Areas: Revise Forest definitions to include snowfields, alpine meadows, and glaciers, which are currently excluded but are crucial for climate regulation and water security in Himalayan states.
• Strengthen Structural and Governance Reforms: Ensure Himalayan governance is equitable and transparent by embedding strong regulatory oversight and preventing misuse of green funds for unsustainable activities such as unregulated hydropower, road expansion, and mass tourism.

Need for an Increase in Green Bonus for the Himalayan State

• Biodiverse Ecology: The Himalayan states act as India’s ecological backbone, harbouring rare and endangered species and possessing unique ecological value.
• Himalayan Glacier Dynamics: They act as “water towers” that feed the rivers of North India, supporting river systems, climate regulation and hydropower generation.
• Eco-sensitive restrictions: These states face disproportionate environmental and developmental costs, frequent disasters (floods, GLOFs, landslides), high deforestation for infrastructure and limited economic opportunities.
• Undervalued Natural capital: The non-monetary value of their natural capital, like forests, glaciers and rivers is immense but under-compensated, as highlighted by a 2025 valuation placing Himachal’s annual ecosystem value at ₹3.2 lakh crore, yet not acknowledged in central fund allocation. 

Sources:
Indian Express
Down to Earth