Fiscal Health Index (FHI) 2025
Context:
Recently, the NITI Aayog released its first-ever Fiscal Health Index (FHI) 2025 report, evaluating the fiscal performance of 18 major Indian states for the financial year 2022-23.
Relevance:
GS-02 (Government policies and interventions)
Highlights about Fiscal Health Index (FHI), 2025 :
- The Fiscal Health Index (FHI) 2025 is a vital roadmap for understanding the fiscal health of states.
- It highlights the need for balanced financial management to ensure sustainable growth across India.
- It is developed by NITI Aayog, and it sources the data from the Comptroller and Auditor General (CAG).
- It rates states under the following criteria:
- Quality of Expenditure
- Revenue Mobilization
- Fiscal Prudence
- Debt Index
- Debt Sustainability
Top Performers:
- States: Odisha, Chhattisgarh, Goa, and Jharkhand.
- Performance Metrics:
- High capital outlay: Up to 4% of Gross State Domestic Product (GSDP).
- Revenue surplus with effective non-tax revenue mobilisation.
- Low interest payments: Only up to 7% of revenue receipts.
- Odisha’s Excellence:
- Highest overall FHI score: 67.8.
- Top in debt index (99.0) and debt sustainability (64.0).
- Maintains low fiscal deficits and a strong capital outlay-to-GSDP ratio.
