NITI Aayog Unveils Fiscal Health Index 2025

Current Affairs National

Posted by newadmin on 2025-01-27 17:09:28 |

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The Fiscal Health Index (FHI) 2025 is an annual publication designed to evaluate the fiscal health of Indian states. The goal is to provide data-driven insights to improve policy interventions, fiscal governance, and economic resilience across the states.

The FHI evaluates 18 major states using five key sub-indices: Quality of Expenditure, Revenue Mobilization, Fiscal Prudence, Debt Index, and Debt Sustainability. These sub-indices are combined into a composite fiscal index that ranks each state based on its fiscal health. This comprehensive assessment identifies both strengths and weaknesses in state finances, offering valuable insights into areas for improvement.

Top-performing States:
Odisha leads the FHI rankings with a score of 67.8, showing strong fiscal health through effective revenue mobilization and prudent expenditure management. Chhattisgarh and Goa follow with scores of 55.2 and 53.6, respectively. These states have set a high benchmark for others with their robust fiscal governance practices.

States Needing Improvement:
Jharkhand has made progress in fiscal prudence and debt sustainability, although challenges remain in other areas. Karnataka faces difficulties, particularly in expenditure quality and debt management, underscoring the need for reforms to address fiscal imbalances.

Importance of the Fiscal Health Index:
The FHI acts as a roadmap for states to achieve fiscal consolidation, promoting transparency and efficient resource management. It is more than just a ranking system—it’s a tool for assessing fiscal health and improving governance, helping states align their fiscal strategies with national objectives.

Cooperative Federalism and Fiscal Discipline:
The FHI launch emphasizes the importance of cooperative federalism. Collaboration between the Centre and states is vital for addressing regional disparities and driving holistic economic development.

Future Implications:
The FHI aligns with India's vision of a Viksit Bharat by 2047, aiming for a stable and prosperous nation. The insights from this report will guide policymakers in making informed decisions and encourage healthy competition among states to improve fiscal practices.

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