Odisha, Chhattisgarh, and Goa Recognised as Top-Performing States in NITI Aayog's Fiscal Health Index 2025

Odisha, Chhattisgarh, Goa, and Jharkhand have been identified as leading states in the NITI Aayog's inaugural Fiscal Health Index (FHI) report. Released on Friday, the report evaluates the fiscal health of 18 major Indian states for the year 2022-23. These states significantly contribute to India's GDP, demography, public expenditure, revenues, and fiscal stability.

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The report categorises states into various performance groups. Odisha achieved the highest overall index score of 67.8. Maharashtra, Uttar Pradesh, Telangana, Madhya Pradesh, and Karnataka are classified as front-runners. Meanwhile, Tamil Nadu, Bihar, Rajasthan, and Haryana are labelled as performers.

Focus on Fiscal Stability

Odisha's top position is attributed to its strong fiscal health indicators. The state excels in debt index with a score of 99.0 and debt sustainability at 64.0. It maintains low fiscal deficits and a robust debt profile, alongside an above-average capital outlay/GSDP ratio.

The report highlights that Odisha's success is due to effective non-tax revenue mobilisation and maintaining a revenue surplus. Interest payments remain low at up to 7% of revenue receipts. The state's capital outlay reaches up to 4% of its GSDP.

Challenges for Aspirational States

In contrast, Punjab, Andhra Pradesh, West Bengal, and Kerala face significant fiscal challenges. These states are listed under the aspirational category due to their struggles with fiscal and revenue deficit targets. They also experience low revenue mobilisation and increasing debt burdens.

The report notes that Kerala and Punjab have issues with low quality of expenditure and debt sustainability. West Bengal faces challenges in revenue mobilisation and debt index scores. Andhra Pradesh struggles with a high fiscal deficit while Haryana has a poor debt profile.

Performance Analysis of Front-Runners

The front-runner states demonstrate strong fiscal management with high developmental expenditure reaching up to 73%. They show consistent growth in own tax revenue and improved debt sustainability with a debt-to-GSDP ratio of 24%.

According to the report, Odisha, Goa, Karnataka, Maharashtra, and Chhattisgarh scored the highest average FHI scores from 2014-15 to 2021-22. This reflects their sustained fiscal health over the years.

The data for calculating the Fiscal Health Index is sourced from the Comptroller and Auditor General (CAG). The report aims to provide insights into the fiscal health of Indian states by analysing major variables and sub-components under each variable.