NITI Aayog Launches Inaugural Fiscal Health Index 2025 Report: Odisha Tops Rankings Among 18 States

Comprehensive Assessment of States’ Fiscal Health Highlights Achievements, Challenges, and Policy Recommendations for Sustainable Economic Growth.

The inaugural issue of NITI Aayog’s “Fiscal Health Index (FHI) 2025” was officially launched by Dr. Arvind Panagariya, Hon’ble Chairman of the 16th Finance Commission, in the presence of prominent dignitaries, including Shri Suman Bery, Hon’ble Vice Chairman, NITI Aayog; Dr. Arvind Virmani, Hon. Member, NITI Aayog; Shri B.V.R. Subrahmanyam, CEO, NITI Aayog; and Dr. Anoop Singh, Distinguished Fellow, NITI Aayog. The event witnessed participation from senior policymakers and officials.

The report provides a detailed analysis of the fiscal health of 18 major Indian States, assessed through five key sub-indices:

Quality of Expenditure

Revenue Mobilization

Fiscal Prudence

Debt Index

Debt Sustainability

These indices highlight state-specific challenges, achievements, and areas for improvement, offering a roadmap for fiscal reforms aimed at sustainable and resilient economic growth.

Key Findings of FHI 2025

The composite ranking reveals Odisha as the top-performing state in fiscal health, achieving a cumulative score of 67.8. Chhattisgarh and Goa follow with scores of 55.2 and 53.6, respectively.

• Odisha leads due to its robust performance in revenue mobilization, expenditure management, and debt sustainability.
• Jharkhand has shown significant improvements in fiscal prudence and debt sustainability.
• Karnataka, however, faces a decline due to weaker performance in expenditure quality and debt management.

Objectives and Recommendations

The FHI provides actionable insights for policymakers and highlights disparities in state-level fiscal performance. The report emphasizes the importance of fiscal discipline, cooperative federalism, and regional collaboration to address specific fiscal challenges.

Speaking at the launch, Dr. Panagariya stressed the need for States to pursue stable fiscal paths that ensure balanced regional development and long-term sustainability. “The FHI offers a comprehensive framework for measuring fiscal health and understanding broader trends across the nation. It serves as a tool for promoting sustainable growth and reinforcing the shared responsibility of all levels of government in achieving national prosperity,” he said.

Shri Suman Bery described the FHI as more than just a ranking tool, positioning it as a strategic guide to achieve fiscal consolidation and improve transparency. He emphasized that the index reflects a broader vision to enhance resource management and foster economic resilience.

Shri B.V.R. Subrahmanyam highlighted that the FHI report supports policymakers by offering objective assessments and actionable recommendations. He stated, “The FHI aligns with India’s vision of ‘Viksit Bharat @2047’, where fiscal discipline at the state level will drive the nation’s economic transformation.”

Dr. Virmani commended the effort, emphasizing the critical role of cooperative federalism in addressing regional disparities and promoting holistic development. He highlighted that the FHI serves as a cornerstone for fostering stronger collaboration between the Centre and States to achieve equitable growth.

Significance of FHI as a Policy Tool

The Fiscal Health Index 2025 report is part of an annual series aimed at supporting data-driven decision-making and enhancing policy interventions. By identifying fiscal trends and challenges, the report fosters healthy competition among states, encouraging them to align their fiscal strategies with national objectives.

In addition to analyzing the current fiscal landscape, the FHI introduces a state-specific roadmap for improvement, focusing on areas such as:

• Strengthening revenue generation mechanisms.
• Enhancing expenditure quality and efficiency.
• Maintaining prudent debt management.

Broader Vision

The FHI aligns with the nation’s larger goals under ‘Viksit Bharat @2047’, with fiscal health playing a pivotal role in realizing India’s economic potential. The report underscores the importance of collaboration between the Centre and States, fostering transparency and accountability in governance, and achieving sustainable economic growth.

This initiative reaffirms NITI Aayog’s commitment to empowering states with the tools and insights necessary for driving economic transformation, ensuring a more equitable and prosperous future for all Indians.