FISCAL HEALTH INDEX

GS2 GOVERNANCE

The Fiscal Health Index (FHI) 2025 is an annual report that evaluates the fiscal health of Indian states. It is designed to improve fiscal governance and economic resilience through data-driven insights. The FHI uses five key sub-indices:

1. Quality of Expenditure
2. Revenue Mobilisation
3. Fiscal Prudence
4. Debt Index
5. Debt Sustainability

The index ranks 18 major Indian states based on these sub-indices, identifying strengths and weaknesses in fiscal management.

Top Performers:

• Odisha leads with a score of 67.8, followed by Chhattisgarh (55.2) and Goa (53.6), demonstrating strong fiscal health.

States Needing Improvement:

• Jharkhand shows progress in fiscal prudence and debt sustainability, but Karnataka faces challenges in expenditure quality and debt management, indicating the need for targeted reforms.

Importance: The FHI promotes transparency, fiscal consolidation, and resource management, acting as a tool to improve state fiscal health. It fosters cooperative federalism by encouraging collaboration between the Centre and states.

The FHI aligns with India’s vision for Viksit Bharat @2047, aiming for a fiscally stable and prosperous nation.