NITI Aayog’s Fiscal Health Index 2025 Ranks Odisha as Top-Performing State 

NITI Aayog, in collaboration with the Press Information Bureau, has released the Fiscal Health Index (FHI) 2025, a comprehensive assessment of the fiscal resilience of India’s 18 major states. The report, based on 2022-23 data from the Comptroller and Auditor General (CAG), highlights Odisha as the top-performing state, followed by Chhattisgarh, Goa, Jharkhand, and Gujarat. Punjab, Andhra Pradesh, and West Bengal emerged as the weakest, grappling with high debt burdens and fiscal deficits.

Key Findings: Strengths and Challenges 

The FHI evaluates states across five pillars: revenue generation, expenditure management, debt sustainability, fiscal deficit control, and overall fiscal health. Key insights include:

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1. Top Performers: 

- Odisha (Score: 67.8): Leads in debt sustainability (99/100) and revenue mobilization, driven by mining premiums.

- Chhattisgarh (55.2): Excels in expenditure quality and coal auction-linked revenue.

- Goa (53.6): Achieves the highest non-tax revenue (87.1/100) but faces moderate debt risks.

2. Critical Challenges: 

- Punjab (10.7): Ranks lowest due to zero debt sustainability and high fiscal deficits.

- Andhra Pradesh (20.9) and West Bengal (21.8): Struggle with low capital expenditure (10% of spending) and rising debt-to-GSDP ratios.

- Kerala (25.4): Despite robust revenue mobilization, its debt index (23.1) reflects severe stress.

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3. Expenditure Patterns: 

- States like Madhya Pradesh, Odisha, and Uttar Pradesh allocate 27% of developmental funds to capital expenditure, boosting infrastructure.

- West Bengal, Punjab, and Rajasthan lag, spending only 10% on capital projects.

Regional Disparities and Policy Implications

The report underscores stark disparities:

- Eastern and Central India (Odisha, Chhattisgarh, Jharkhand) outperform due to resource-driven revenues and prudent fiscal management.

- Southern States: While Karnataka (40.8) and Telangana (43.6) show moderate performance, Tamil Nadu (29.2) and Andhra Pradesh face revenue shortfalls.

- Northern States: Uttar Pradesh (45.9) and Haryana (27.4) exhibit mixed results, with UP improving expenditure efficiency but Haryana lagging in debt management.

The NITI Aayog urged states to enhance non-tax revenue through asset monetization and mining royalties, prioritize capital expenditure to spur long-term growth and curb debt accumulation by adhering to FRBM limits.

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MoS of Ministry of Statistics Rao Inderjit Singh had recently, in response to an unstarred question at Lok Sabha stated that, “The FHI is designed to offer crucial, data-driven insights into the fiscal health of India's states, aiding informed policymaking and guiding strategic interventions. Its analysis and findings aim to provide policymakers with a clear picture of the fiscal health of individual states, identifying areas in need of improvement.

In the inaugural edition, 18 major states, excluding North East and Himalayan States as well as the Union Territories, were ranked on the fiscal parameters, with the states categorized into four groups: Achievers, Front Runners, Performers, and Aspirational. The analysis and findings aim to assist policymakers by offering a clear understanding of the fiscal health of individual states, helping to pinpoint areas that need reform and strategic focus. The report helps understand fiscal status at the sub-national level and to drive policy reforms that will promote sustainable and resilient economic growth.”

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