Annual Indian Fiscal Health Index Report (Fiscal Year)

List of Key Chapter Titles

1. Introduction
2. A Brief Review of State Fiscal Research
3. Variable Definition and Data Interpretation
4. Research Methodology
5. Research Findings
6. State-Level Analysis
7. Appendix

Document Introduction

State-level fiscal health is the cornerstone of sustainable economic development and effective governance in India, playing a crucial role in building a nationally competitive and inclusive economic framework. With the deepening of fiscal decentralization and the strengthening of the states' role in development, monitoring and improving state fiscal health has become a core issue for achieving national fiscal stability and prosperity. This report, released by the National Institution for Transforming India (NITI Aayog), aims to provide policymakers and researchers with objective decision-making references through a systematic assessment tool.

The Fiscal Health Index (FHI) constructed in the report encompasses five core sub-indices: Expenditure Quality, Revenue Mobilization, Fiscal Prudence, Debt Index, and Debt Sustainability, forming a comprehensive assessment framework through 9 secondary sub-indicators. The research data is sourced from the Comptroller and Auditor General of India (CAG), covering time-series data from the fiscal years 2014-15 to 2022-23, with a focus on analyzing the fiscal performance of 18 major states in FY 2022-23, excluding special category states in the Himalayan region and the Northeast.

The study employs a standardized normalization method, classifying indicators into improvement-type indices and deprivation-type indices for separate calculation. The final scores are synthesized using the arithmetic mean method, followed by state-level ranking and classification. The report not only presents the comprehensive rankings of each state but also delves into performance differences across various sub-dimensions, revealing the strengths and key challenges in state-level fiscal management, while also tracing the evolution of fiscal trends using historical data.

Key findings show that Odisha, Chhattisgarh, Goa, Jharkhand, and Gujarat rank in the top five in the comprehensive ranking, while Haryana, Kerala, West Bengal, Andhra Pradesh, and Punjab are in the tier requiring improvement. States show uneven performance across different sub-dimensions; for example, Uttar Pradesh and Bihar score higher on expenditure quality but have weaker revenue mobilization capabilities; Karnataka shows robust overall performance but faces debt sustainability challenges.

The report emphasizes that strong revenue mobilization, effective expenditure management, and prudent fiscal practices are the core determinants of state-level fiscal health. Persistent high deficits and inter-state performance disparities highlight the urgency of reform, while transparent management, strengthened tax compliance, and targeted infrastructure investment are key pathways to achieving fiscal sustainability. This report provides a data-driven empirical foundation and actionable insights for promoting state-level fiscal discipline and enhancing governance effectiveness.