NITI AAYOG’S FISCAL HEALTH INDEX (FHI) 2025

Overview

• Purpose: Assess and rank the fiscal health of Indian states.
• Period Covered: Fiscal Year 2022-23 and historical data from 2014-15 to 2021-22.
• States Ranked: 18 major Indian states based on their contribution to GDP, fiscal stability, expenditure, and revenue patterns.
• Fiscal data sourced from the Comptroller and Auditor General (CAG) of India.

Top Performers

• Achievers: Odisha, Chhattisgarh, Goa, Jharkhand.
• Odisha:
  • Top overall score: 67.8.
  • Best in debt index (99.0) and debt sustainability (64.0).
  • High capital outlay (~4% of GSDP), revenue surplus, and low interest payments (~7% of revenue receipts).
• Front-Runners: Maharashtra, Uttar Pradesh, Telangana, Madhya Pradesh, Karnataka.
  • High developmental expenditure (~73%), strong tax revenue growth, and low debt-to-GSDP ratio (24%).

Moderate Performers

• Performers: Tamil Nadu, Bihar, Rajasthan, Haryana.
  • Balanced fiscal performance but areas for improvement in debt management and revenue generation.

Struggling States

• Aspirational States: Punjab, Andhra Pradesh, West Bengal, Kerala.
  • Common issues:
    • High fiscal and revenue deficits.
    • Low revenue mobilisation.
    • High debt burden and poor debt sustainability.
  • Specific Challenges:
    • Kerala and Punjab: Low quality of expenditure.
    • West Bengal: Revenue mobilisation issues.
    • Andhra Pradesh: High fiscal deficits.
    • Haryana: Weak debt profile.

Trends & Insights

• High-Performing Achievers:
  • Effective non-tax revenue mobilisation.
  • Low fiscal deficits and prudent debt management.
• Issues in Aspirational States:
  • Difficulty meeting deficit targets and managing growing debt burdens.
• Historical Best (2014-22): Odisha, Goa, Karnataka, Maharashtra, and Chhattisgarh consistently scored high in fiscal health.

Fiscal health improvements require robust revenue mobilisation, controlled fiscal deficits, increased developmental expenditure, and sustainable debt management.