NITI Aayog States Fiscal Health Index: Assessing Economic Stability & Growth

January 30, 2025
by rajeev
0

National Institution for Transforming India (NITI Aayog) launched its inaugural Fiscal Health Index (FHI) 2025 for 18 major states

It has been calculated using the data from the Comptroller and Auditor General of India (CAG). The period of the analysis is Financial Year 2022-23

Fiscal Health Index is a tool designed to assess and thereby improve the fiscal health of the states through key indicators

It focuses on five sub-indices. Quality of Expenditure, Revenue Mobilization, Fiscal Prudence, Debt Index, and Debt Sustainability.

MAJOR SUB-INDICES	MINOR SUB-INDICES
1. Quality of Expenditure	1.1 Total Developmental Expenditure/Total Expenditure 1.2 Total Capital Outlay/ GSDP*
2. Revenue Mobilization	2.1 State Own Revenue/ GSDP* 2.2 State Own Revenue/ Total Expenditure
3. Fiscal Prudence	3.1 Gross Fiscal Deficit/ GSDP* 3.2 Revenue Deficit/ GSDP
4. Debt Index	4.1 Interest Payments/Revenue Receipts 4.2 Outstanding Liabilities/ GSDP*
5. Debt Sustainability	5.1 Growth Rate of GSDP* – Growth Rate of Interest Payments

The top five high-performing states are Odisha, Chhattisgarh, Goa, Jharkhand, and Gujarat, while the aspirational five are Haryana, Kerala, West Bengal, Andhra Pradesh, and Punjab. However, the states’ performance varies across the five subcategories. For instance, Uttar Pradesh and Bihar have a good score under Quality of Expenditure, but they rank lower concerning Revenue Mobilization. Karnataka performs well across most indices but it ranks amongst the three aspirational states in Debt Sustainability. Odisha and Chhattisgarh have performed well under Revenue Mobilization, with their Own Non-Tax Revenue growing significantly due to high revenue collection from mining. However, regarding Debt Sustainability, Chhattisgarh ranks lower compared to some other states.