Fiscal Health Index (FHI) 2026
Released by NITI Aayog to evaluate fiscal performance of Indian states
The Fiscal Health Index (FHI) 2026 is the second edition released by NITI Aayog to evaluate the fiscal performance of Indian states. It provides a data-driven framework to assess fiscal sustainability, compare state finances, and guide fiscal reforms.
Why it matters
Global public debt surged to nearly USD 102 trillion in 2024, increasing pressure on public finances worldwide. Strong state finances are essential for India's macroeconomic stability.
What is the Fiscal Health Index?
The Fiscal Health Index is a framework developed by NITI Aayog to assess fiscal management of states across five key pillars.
Five Pillars of FHI
- Quality of Expenditure
- Revenue Mobilisation
- Fiscal Prudence
- Debt Index
- Debt Sustainability
The index uses financial data verified by the Comptroller and Auditor General (CAG), ensuring transparency and reliability.
Coverage of FHI 2026
- Fiscal trends analysed from FY 2014-15 to FY 2023-24.
- Second edition expanded coverage to include North-Eastern and Himalayan states.
- Indicators adjusted to reflect geographic challenges and limited revenue capacity.
Key Highlights – Major States
Top Performers: Odisha, Goa, Jharkhand
- Odisha leads the ranking due to stable revenues and controlled fiscal deficits.
- Common characteristics of top performers include:
- Own-tax share above 60%
- Capital expenditure around 4-5% of GSDP
- Fiscal deficit below 3% of GSDP
- Debt levels below 25% of GSDP
Front Runner States
- Gujarat
- Maharashtra
- Chhattisgarh
- Telangana
- Uttar Pradesh
- Karnataka
States Facing Fiscal Challenges
Aspirational States: West Bengal, Kerala, Andhra Pradesh, Punjab
- Debt levels around 35-45% of GSDP.
- Committed expenditure takes up 50-60% of revenue receipts.
- Interest payments exceed 15-20% of revenue receipts.
- Frequent breaches of FRBM deficit norms.
North-Eastern & Himalayan States
Top Achievers: Arunachal Pradesh and Uttarakhand
- Arunachal Pradesh ranks first due to prudent debt management and high expenditure quality.
- Uttarakhand performs well due to better own-revenue mobilisation.
Regional Challenges
- Limited tax base
- Sparse population density
- High dependence on Union transfers
- Higher committed expenditure
Policy Recommendations
- Improve tax mobilisation
- Control committed expenditure
- Increase capital spending
- Strengthen fiscal transparency
- Adopt medium-term fiscal planning
Strong state finances are crucial for maintaining India's long-term economic stability.