New Delhi, January 24: Odisha tops the ranking in Fiscal Health Index among 18 major States, followed by Chhattisgarh and Goa with scores of 55.2 and 53.6, respectively with a cumulative score of 67.8 points.
The achiever states display strong fiscal health, excelling in revenue mobilization, expenditure management, and debt sustainability. Improvements are seen in states like Jharkhand, which has strengthened fiscal prudence and debt sustainability, while Karnataka faces a decline due to weaker performance in expenditure quality and debt management. These interstate disparities highlight the need for targeted reforms to address specific fiscal challenges and ensure sustainable growth.
Chairman of the 16th Finance Commission, Dr. Arvind Panagariya, launched the inaugural issue of NITI Aayog’s report titled “Fiscal Health Index (FHI) 2025” on 24th January 2025 in New Delhi, in the august presence of Suman Bery, Vice Chairman, NITI Aayog; Dr. Arvind Virmani, Member, NITI Aayog; BVR Subrahmanyam, CEO, NITI Aayog; Dr. Anoop Singh, Distinguished Fellow, NITI Aayog and other senior officials.
The report provides a comprehensive assessment of the fiscal health of 18 major States, based on five key sub-indices: Quality of Expenditure, Revenue Mobilisation, Fiscal Prudence, Debt Index, and Debt Sustainability, along with insights into state-specific challenges and areas for improvement.
The FHI aims to throw light on the fiscal status at the sub-national level and guide policy reforms for sustainable and resilient economic growth. The report ranks States on the basis of composite fiscal index, which is based on five major sub-indices viz, quality of expenditure, revenue mobilisation, fiscal prudence, debt index, and debt sustainability.
Chairman of the 16th FC, Dr. Panagariya, while launching the report, underscored the need for the States to follow a stable fiscal path for balanced regional development, long-term fiscal sustainability, and prudent governance. He mentioned that the FHI offers a comprehensive and systematic approach to measuring state-level fiscal performance and provides valuable insights into broader fiscal trends, allowing for a better understanding of fiscal health across the country. He emphasised that the FHI report helps to promote a more integrated approach to fiscal health and sustainable growth, reinforcing the shared responsibility of both levels of government in achieving national prosperity.
Speaking on the occasion, Suman Bery emphasised that the FHI offers a roadmap for achieving fiscal consolidation, improving transparency, and fostering effective resource management. He further stated that FHI is not merely a ranking but a tool designed to assess and thereby improve the fiscal health of States. It provides a framework to evaluate the financial well-being of state economies through key fiscal indicators.
B.V.R. Subrahmanyam highlighted that the FHI report will be instrumental in helping policymakers make informed decisions. He noted that the report provides an objective picture of the fiscal landscape across states and also offers actionable insights for strengthening fiscal resilience and ensuring sustainable economic development of the States. By focusing on major fiscal indicators, the FHI encourages states to align their fiscal strategies with national objectives, ensuring their contributions to the goal of a fiscally stable and prosperous India and, most importantly, promoting healthy competition among states. He stressed that the FHI's findings are aligned with India’s broader vision of achieving “Viksit Bharat @2047,” where fiscal discipline at the state level plays a pivotal role in the nation’s economic transformation.
Dr. Virmani congratulated the team and highlighted that the FHI report will underscore the critical role of cooperative federalism in strengthening India's governance framework. He emphasized that fostering collaboration between the Centre and states is key to addressing regional disparities and driving holistic economic development.
It is further informed that this report marks the launch of an annual series aimed at providing valuable, data-driven insights into the fiscal health of India’s states, fostering informed decision-making and policy interventions. The FHI is designed to assist policymakers by offering insights into states’ fiscal health and helping identify areas requiring intervention and strategic planning.
