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(THE GIST OF PIB) Fiscal Health Index

(JANUARY-2025)

Recently, the Chairman of the 16th Finance Commission launched the inaugural issue of NITI Aayog’s report titled “Fiscal Health Index (FHI) 2025” in New Delhi.

It provides a comprehensive assessment of the fiscal health of 18 major States of India.
It is 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.
It aims to throw light on the fiscal status at the sub-national level and guide policy reforms for sustainable and resilient economic growth.
It has been developed using data from the Comptroller and Auditor General (CAG).

With a cumulative score of 67.8, Odisha tops the ranking, followed by Chhattisgarh and Goa with scores of 55.2 and 53.6, respectively.
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.
Punjab, Andhra Pradesh, West Bengal and Kerala were the worst-performing States in the Fiscal Health Index (FHI), each facing significant fiscal challenges, and listed under “aspirational” category.
It has listed Maharashtra, Uttar Pradesh, Telangana, Madhya Pradesh, Karnataka under the “front-runners” category.
Tamil Nadu, Bihar, Rajasthan, and Haryana were classified as performers.