“The Fiscal Health Index report will be an annual publication focusing on the fiscal health of Indian states, offering data-driven insights that will be leveraged for informed state-level policy interventions to improve overall fiscal governance, economic resilience, and stability of the nation”
– Sh. BVR Subrahmanyam, CEO, NITI Aayog.
On January 24, 2025, Dr. Arvind Panagariya, Chairman of the 16th Finance Commission, launched NITI Aayog’s inaugural Fiscal Health Index (FHI) 2025 in New Delhi. The report evaluates the fiscal health of 18 major states using five key sub-indices: Quality of Expenditure, Revenue Mobilization, Fiscal Prudence, Debt Index, and Debt Sustainability. It also provides state-specific insights. Additionally, it highlights areas for improvement.
Key Findings and Rankings
The FHI ranks states on a composite fiscal index. It emphasizes fiscal health at the sub-national level to guide sustainable economic growth.
- Odisha leads with a score of 67.8, followed by Chhattisgarh (55.2) and Goa (53.6).
- Achiever States demonstrate strong fiscal performance in revenue mobilization, expenditure quality, and debt sustainability.
- States like Jharkhand show improvement in fiscal prudence and debt management. In contrast, Karnataka faces challenges due to weaker expenditure quality and debt management.
Purpose of the Report
The FHI aims to:
- Shed light on interstate fiscal disparities.
- Guide policy reforms to address fiscal challenges.
- Promote sustainable and resilient growth across states.
This annual series offers policymakers data-driven insights into states’ fiscal health. It enables targeted reforms, informed decisions, and strategic planning for robust economic development.
The full report can be accessed at: https://www.niti.gov.in/sites/default/files/2025-01/Fiscal_Health_Index_24012025_Final.pdf
References
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