Patachitra, Odisha
New Delhi: With a cumulative score of 67.8, Odisha topped the ranking in fiscal health among 18 major States, followed by Chhattisgarh and Goa with scores of 55.2 and 53.6, respectively in the Fiscal Health Index 2025, launched today by the NITI Aayog. The Fiscal Health Index aims to throw light on the fiscal status at the sub-national level and guide policy reforms for sustainable and resilient economic growth.
While 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, it provides a comprehensive assessment of the fiscal health of 18 major States, along with insights into state-specific challenges and areas for improvement.
The achiever States displayed strong fiscal health, excelling in revenue mobilization, expenditure management, and debt sustainability, the report said.
Improvements were seen in states like Jharkhand, which strengthened fiscal prudence and debt sustainability, while Karnataka faced 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, 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.
Suman Bery, Vice Chairman, NITI Aayog, 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.
BVR Subrahmanyam, CEO of NITI Aayog, 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. Subrahmanyam said the 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”.
– global bihari bureau
