Why is it in the news?
NITI Aayog released the second edition of the Fiscal Health Index (FHI) 2026.
The index evaluates fiscal performance of states and highlights concerns over rising public debt and fiscal sustainability.
Category: Economy
Important Points:
● Fiscal Health Index is developed by NITI Aayog to assess fiscal performance of Indian states.
● It evaluates states across five pillars – Quality of Expenditure, Revenue Mobilisation, Fiscal Prudence, Debt Index and Debt Sustainability.
● The index uses data verified by the Comptroller and Auditor General ensuring transparency and reliability.
● It analyses fiscal trends over a decade from FY 2014–15 to FY 2023–24.
● The second edition expanded coverage to include North-Eastern and Himalayan states along with general category states.
● Among major states, Odisha, Goa and Jharkhand are ranked as top performers (Achievers).
● Aspirational states like West Bengal, Kerala, Andhra Pradesh and Punjab face high debt levels and fiscal stress.
● Debt levels in weaker states range around 35–45% of GSDP with high interest burden.
● States account for about one-third of India’s total public debt, making fiscal discipline critical for macroeconomic stability.