FISCAL HEALTH INDEX 2026

NEWS: NITI Aayog released the second annual edition of the Fiscal Health Index (FHI) 2026

About

• The Fiscal Health Indexà Comprehensive framework designed by NITI Aayog to evaluate and compare the fiscal soundness of Indian states.
• Moves beyond simple deficit indicators to provide a structured assessment of fiscal strengths and vulnerabilities across states.

About the Report

• Published byà NITI Aayog, Government of India.
• The index is built on five core pillars:
  • Focuses on developmental and capital spending versus committed outlays.
  • Measures the capacity to generate internal tax and non-tax revenues.
  • Assesses deficit management and adherence to FRBM norms.
  • Evaluates the size and burden of outstanding liabilities.
  • Analyzes the long-term ability to service debt without fiscal stress.

Ranking

• Top PerformersàOdisha – Rank 1, Goa – Rank 2, Jharkhand – Rank 3, Gujarat – Rank 4

Summary of the Report:

• Expanded its scope to include 10 North-Eastern and Himalayan States, recognizing their unique structural and geographic fiscal constraints.
• Odishaà Maintained its leadership due to stable revenues and controlled deficits, while Arunachal Pradesh led the NE/Himalayan category with high expenditure quality.
• States like Punjab, Kerala, and West Bengal àContinue to face fiscal stress due to rising debt, high deficits, and low revenue growth.
• Macro-Fiscal Linkageà State finances now account for roughly one-third of India’s general government debt