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Informist, Wednesday, Mar. 11, 2026

 

NEW DELHI – Odisha retained the top spot in NITI Aayog's fiscal health index, with the state's performance improving across most fiscal metrics in 2023-24 (Apr-Mar) from a year ago. Chhattisgarh, which ranked second in the index for FY23, fell four spots to sixth mainly because of a sharp deterioration in fiscal prudence in FY24.

 

The NITI Aayog's fiscal health index scores states on the basis of their performance in five categories--revenue mobilisation, quality of expenditure, fiscal prudence, debt index, and debt sustainability.

 

Odisha had the highest overall score for FY24, followed by Goa and Jharkhand. West Bengal, Andhra Pradesh, and Punjab remained the worst performers in the fiscal health index.

 

The top performing states maintained fiscal discipline and better resource mobilisation, while states which fared the worst lacked fiscal prudence and showed unsustainable expenditure patterns, the report released Wednesday said.

 

While the Centre has improved its fiscal position since the COVID-19 pandemic, several states continue to see high fiscal deficits and debt levels. The Reserve Bank of India has previously said that high debt levels of state governments necessitate a time-bound fiscal consolidation glide path. A December 2024 RBI staff paper warned that freebies announced by state governments could eat into the money needed to take key infrastructure, both social and economic, further forward.

 

The latest fiscal health index also scored the fiscal performance of the north-eastern and Himalayan states. Among these, Arunachal Pradesh and Uttarakhand had the highest scores, while Manipur and Himachal Pradesh fared the worst.

 

"The decadal trends indicate a gradual divergence: states with stronger revenue capacity and more disciplined expenditure management have continued to improve, while those facing structural revenue constraints and fiscal rigidities have experienced fiscal pressures," the report said. "Enhancing fiscal discipline, boosting own revenue mobilisation, and improving expenditure quality remain central to reducing medium-term fiscal risks."

 

States with low developmental expenditure need to prioritise increasing allocations to infrastructure, health, and education, the report said. States with weak capital outlays need to scale up public investment to improve long-term growth and expenditure quality, it added.  End

 

Reported by Shubham Rana

Edited by Ashish Shirke

 

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