Fiscal Health Index (FHI) 2025

On January 24, 2025, Dr. Arvind Panagariya, Chairperson of the 16th Finance Commission, launched the inaugural edition of NITI Aayog’s Fiscal Health Index (FHI) 2025. The report evaluates the fiscal health of 18 major Indian states.

Key Highlights of the Report:

• Assessment Criteria: The FHI evaluates states across five sub-indices:
  • Quality of Expenditure: Efficiency and effectiveness of spending.
  • Revenue Mobilisation: Ability to generate and manage revenue.
  • Fiscal Prudence: Responsible fiscal management practices.
  • Debt Index: Debt burden and its impact on fiscal health.
  • Debt Sustainability: Long-term viability of current debt levels.
• Objective:
  • Provide a comprehensive overview of fiscal performance at the sub-national level.
  • Highlight state-specific challenges and opportunities for improvement.
  • Encourage policy reforms aimed at sustainable economic growth.
• Top Performers:
  • Odisha: Ranked 1st with a cumulative score of 67.8, reflecting strong fiscal discipline and efficient resource utilization.
  • Chhattisgarh: Secured the 2nd spot with 55.2.
  • Goa: Ranked 3rd with 53.6.
• Significance:
  • The FHI 2025 sheds light on disparities in fiscal performance among states.
  • Serves as a tool for policymakers to identify best practices and address weaknesses in areas like expenditure quality, debt management, and revenue generation.