Fiscal Health Index 2025

Fiscal Health Index 2025: The NITI Aayog has recently released its first Fiscal Health Index (FHI).

• About the Top-Performing States:

o Achievers: Odisha, Chhattisgarh, Goa, Jharkhand.

ü Odisha topped with the highest overall index score of 67.8.

o Report Coverage: Covers 18 major States contributing significantly to India's GDP, demography, public expenditure, revenues, and fiscal stability.

• Category Rankings:

o Achievers: Mineral-rich States with high capital outlay and revenue surplus.

o Front-Runners: Maharashtra, Uttar Pradesh, Telangana, Madhya Pradesh, Karnataka.

o Performers: Tamil Nadu, Bihar, Rajasthan, Haryana.

o Aspirational: Punjab, Andhra Pradesh, West Bengal, Kerala (facing fiscal challenges).

• Performance Insights:

o Top Achievers: High capital outlay (up to 4% of GSDP), effective non-tax revenue mobilisation, and low interest payments (up to 7% of revenue receipts).

o Front-Runners: High developmental expenditure (up to 73%), consistent tax revenue growth, and balanced fiscal management with debt-to-GSDP ratio of 24%.

o Aspirational States: Struggling with fiscal and revenue deficit targets and Low revenue mobilisation, high debt burden, and poor debt sustainability.

• State-Specific Observations:

o Odisha: Tops debt index (99.0) and debt sustainability (64.0), maintains low fiscal deficits, strong debt profile, and high capital outlay/GSDP ratio.

o Kerala and Punjab: Low quality of expenditure and poor debt sustainability.

o West Bengal: Faces revenue mobilisation and debt index issues.

o Andhra Pradesh: High fiscal deficit.

o Haryana: Poor debt profile.

• Historical Performance (2014-15 to 2021-22): Highest average FHI scores: Odisha, Goa, Karnataka, Maharashtra, Chhattisgarh.
• Data Source: Data from the Comptroller and Auditor General (CAG).