NITI Aayog unveiled the inaugural issue of the “Fiscal Health Index (FHI) 2025” on January 24, 2025, in New Delhi. The report, launched by the Hon’ble Chairman of the 16th Finance Commission, Dr. Arvind Panagariya, provides a detailed assessment of the fiscal health of 18 major Indian states. The event was graced by Shri Suman Bery, Vice Chairman of NITI Aayog; Dr. Arvind Virmani, Member of NITI Aayog; Shri BVR Subrahmanyam, CEO of NITI Aayog; and other senior officials.
Key Highlights of the Fiscal Health Index (FHI) 2025
The FHI evaluates states based on five critical sub-indices:
1. Quality of Expenditure
2. Revenue Mobilization
3. Fiscal Prudence
4. Debt Index
5. Debt Sustainability
These indicators aim to offer a comprehensive understanding of state-level fiscal performance, providing insights into their economic resilience and areas for improvement.
Ranking of States
The report highlights interstate fiscal disparities:
Odisha emerged as the top-performing state with a cumulative score of 67.8, followed by Chhattisgarh (55.2) and Goa (53.6).
States such as Jharkhand demonstrated significant improvements in fiscal prudence and debt sustainability.
In contrast, Karnataka showed a decline due to weaker expenditure quality and debt management.
These rankings underscore the necessity of targeted reforms to address fiscal challenges and promote sustainable growth across states.
Insights from the Launch
Dr. Arvind Panagariya emphasized the importance of maintaining a stable fiscal path for balanced regional development and long-term sustainability. He noted that the FHI fosters a deeper understanding of fiscal trends and helps states align with national objectives.
Shri Suman Bery highlighted the FHI’s role as a roadmap for fiscal consolidation, transparency, and resource management. He underscored that the report is more than a ranking—it serves as a tool for improvement in state fiscal health.
Shri BVR Subrahmanyam noted the report’s value in providing actionable insights for policymakers, encouraging states to align fiscal strategies with India’s vision of “Viksit Bharat @2047”. He stressed the importance of fiscal discipline and healthy competition among states.
Dr. Arvind Virmani praised the report for promoting cooperative federalism and collaboration between the Centre and states, which are critical for addressing regional disparities and driving holistic economic development.
Purpose and Vision of the FHI
The Fiscal Health Index aims to serve as a valuable resource for policymakers by offering data-driven insights into the fiscal landscape of Indian states. It identifies areas requiring policy intervention, helping states align their strategies for sustainable growth. The annual publication is designed to encourage healthy competition and foster cooperative federalism, ensuring states contribute effectively to India’s broader economic goals.
This inaugural report is a significant step towards achieving the nation’s economic transformation and fiscal stability, paving the way for a prosperous, resilient, and inclusive India.
