Odisha Tops Fiscal Health Index: A Model of Economic Management

Odisha has emerged as the leading state in fiscal health for the fiscal year 2022-23, according to NITI Aayog's Fiscal Health Index. The state achieved the highest overall score, excelling in debt management and sustainability, emphasizing its fiscal prudence and prioritization of key sectors such as health and education.

Odisha has been recognized as the top state in India for fiscal health in the Financial Year 2022-23, as per the latest Fiscal Health Index (FHI) released by NITI Aayog. The state outshone others with an impressive overall FHI score of 67.8, marking its first ascent to the No. 1 spot.

The FHI report assesses the fiscal health of Indian states using crucial metrics, celebrating Odisha's robust performance, particularly in Debt Index and Debt Sustainability. "Odisha excels in fiscal health with the highest overall index score of 67.8," the report noted, with the state leading the Debt Index (99.0) and Debt Sustainability (64.0) rankings, achieving above-average scores in Quality of Expenditure and Revenue Mobilization.

A noteworthy score of 99.0 in the Debt Index underscores Odisha's efficient debt management, while a 64.0 in Debt Sustainability reflects its capability to uphold manageable debt ratios. Odisha's fiscal discipline is pivotal, maintaining low fiscal deficits and a sound debt profile, accompanied by a superior Capital Outlay/GSDP ratio. Beyond adept debt management, Odisha performs above average in vital sub-indices including Quality of Expenditure and Revenue Mobilization.

Significant strides have been made by the state in non-tax revenue mobilization, primarily through mining-linked premiums. Odisha's own non-tax revenue contributed an average of 21% to its total revenue, aligning it with states such as Jharkhand, Goa, and Chhattisgarh in effectively harnessing non-tax resources. The state's strategic focus on both social and economic services, notably in health and education sectors, also propels its fiscal success.

Odisha's revenue spending on health and education increased at a compound annual growth rate (CAGR) of 33.8% between 2020 and 2022, surpassing the 22.6% CAGR of major states in these sectors. The commitment to prudent fiscal management is underscored by Odisha's adherence to the Fiscal Responsibility and Budget Management (FRBM) Act's criteria since 2005.

The state has implemented numerous strategies to retain healthy fiscal indicators, emphasizing long-term sustainability. Odisha's success in the Fiscal Health Index underscores its robust economic management and positions it as a beacon of fiscal prudence and development for other states.

(With inputs from agencies.)