NITI Aayog Releases Fiscal Health Index 2025

January 25, 2025

The Fiscal Health Index (FHI) 2025 is an annual publication evaluates the fiscal health of state of Indias. It aims to provide data-driven insights for better policy interventions. The FHI focuses on improving fiscal governance and enhancing economic resilience across states.

Key Features of the Fiscal Health Index

The FHI assesses 18 major states of Indias using five sub-indices. These are:

Quality of Expenditure
Revenue Mobilisation
Fiscal Prudence
Debt Index
Debt Sustainability

Each state is ranked based on a composite fiscal index derived from these sub-indices. This comprehensive assessment helps identify fiscal strengths and weaknesses among states.

Top Performing States

Odisha leads the FHI rankings with a score of 67.8.
Chhattisgarh and Goa follow with scores of 55.2 and 53.6, respectively.
These states demonstrate strong fiscal health through effective revenue mobilization and prudent expenditure management.
Their performance sets a benchmark for others to follow.

States Needing Improvement

Jharkhand has shown progress in fiscal prudence and debt sustainability. However, Karnataka has faced challenges, particularly in expenditure quality and debt management. Such disparities highlight the need for targeted reforms to address specific fiscal challenges in different states.

Importance of Fiscal Health Index

The FHI serves as a roadmap for states to achieve fiscal consolidation. It promotes transparency and effective resource management. The report is not just a ranking; it is a tool for assessing and improving state fiscal health. It encourages states to align their fiscal strategies with national objectives.

Cooperative Federalism and Fiscal Discipline

The launch of the FHI puts stress on the importance of cooperative federalism. Collaboration between the Centre and states is crucial for addressing regional disparities. This cooperation is vital for driving holistic economic development across India.

Future Implications

The FHI is aligned with India’s vision of Viksit Bharat @2047. It aims for a fiscally stable and prosperous nation. The findings from the FHI will help policymakers make informed decisions. They will also encourage healthy competition among states for better fiscal practices.

« Previous Post Next Post »