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Odisha Tops NITI Aayog’s Fiscal Health Index; Punjab, Andhra Pradesh Among Worst Performers

The Fiscal Health Index 2025 assessed states based on five key parameters: quality of expenditure, revenue mobilization, fiscal prudence, debt index, and debt sustainability.

• By Pooja Chaturvedi Sah
• New Delhi
• Jan 29, 2025

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Odisha, Chhattisgarh, Goa, and Jharkhand have emerged as the best-performing states in NITI Aayog’s Fiscal Health Index (FHI) 2025, which evaluates the fiscal stability of 18 major Indian states. The report, released on January 24 by 16th Finance Commission Chairman Arvind Panagariya, highlights how these states effectively manage revenue, expenditure, and debt, contributing significantly to India’s economic stability.

The Fiscal Health Index 2025 assessed states based on five key parameters: quality of expenditure, revenue mobilization, fiscal prudence, debt index, and debt sustainability.

Top Performers: Odisha Leads the Way

Odisha secured the highest overall score of 67.8, excelling particularly in the Debt Index (99.0) and Debt Sustainability (64.0). The state’s low fiscal deficit, strong debt profile, and effective revenue mobilization reinforced its position at the top. Following Odisha, Chhattisgarh (55.2) and Goa (53.6) secured the second and third spots. Chhattisgarh performed well in debt management, while Goa showed strength in revenue mobilization. Jharkhand, which was ranked 10th in previous years, made notable improvements to claim the fourth position, reflecting its focus on fiscal discipline and debt sustainability.

Other high-ranking states include Gujarat (5), Maharashtra (6), Uttar Pradesh (7), Telangana (8), Madhya Pradesh (9), and Karnataka (10), categorized as “front-runners” due to their balanced fiscal policies and economic resilience. Struggling States: Punjab, Andhra Pradesh, West Bengal at the Bottom At the opposite end of the spectrum, Punjab, Andhra Pradesh, West Bengal, and Kerala ranked the lowest, placed under the “aspirational” category due to their high debt burdens and weak fiscal management.

The report flagged Punjab and Kerala for poor quality of expenditure and unsustainable debt levels, while West Bengal struggled with revenue mobilization and debt servicing. Andhra Pradesh, on the other hand, faced a significant fiscal deficit, while Haryana grappled with a weak debt profile, placing it in the lower half of the rankings.

Key Findings and Fiscal Trends

• States with Strong Fiscal Management: The top five achievers (Odisha, Chhattisgarh, Goa, Jharkhand, and Gujarat) demonstrated higher capital outlays, revenue surpluses, and lower interest payments—indicating financial prudence.

• Front-Runner States: Maharashtra, Uttar Pradesh, Telangana, Madhya Pradesh, and Karnataka reported high developmental expenditure, steady tax revenue growth, and improved debt-to-GSDP ratios.

• Underperforming States: Punjab, Kerala, Andhra Pradesh, and West Bengal struggled with high fiscal and revenue deficits, rising debt burdens, and challenges in sustaining economic growth.

Haryana’s Fiscal Challenges

Haryana ranked 14th among the 18 states, placing it in the lower tier of fiscal performers. The state’s debt-to-GSDP ratio increased from 26% in 2018-19 to 31% in 2022-23, while interest payments grew by 9.4% in the same period. Haryana also ranked 15th in debt index and 16th in quality of expenditure, indicating weaknesses in investment in infrastructure and public services. The report recommended that Haryana should increase capital expenditure, enhance tax collection efficiency, and strengthen its fiscal management framework to improve its ranking.

The Fiscal Health Index 2025 is based on data from the Comptroller and Auditor General of India (CAG) and aims to be an annual assessment of state-level fiscal performance. The study covers 2014-15 to 2022-23, a period during which most states experienced governance under multiple political parties.