NITI Aayog has released the second edition of its Fiscal Health Index (FHI) 2026, benchmarking the fiscal performance of Indian states for the financial year 2023-24. The index uses audited data from the Comptroller and Auditor General (CAG) and evaluates states across five pillars: Quality of Expenditure, Revenue Mobilisation, Fiscal Prudence, Debt Index, and Debt Sustainability.
The FHI 2026 covers 18 General Category States and 10 North-Eastern and Himalayan States separately to ensure equitable comparison. States are classified into four performance tiers: Achiever, Front Runner, Performer, and Aspirant.
Odisha tops the rankings among major general category states, lauded for controlled fiscal deficits and prudent debt management. Among NE and Himalayan states, Arunachal Pradesh leads.
A significant finding for Rajasthan: the state has improved its classification on the Quality of Expenditure dimension — moving from the Performer to the Front Runner tier. This indicates Rajasthan has made measurable progress in directing public spending toward productive capital expenditure, social services, and outcome-linked programmes rather than non-productive revenue expenditure.
Overall, Rajasthan remains classified as a Performer state in the composite index, reflecting that while sectoral improvements exist, challenges persist in areas such as revenue mobilisation, debt sustainability, and overall fiscal consolidation. The state's fiscal deficit and debt-to-GSDP ratio remain areas requiring continued attention.
The FHI serves as a tool for states to benchmark their finances against peers and guides the Finance Commission's recommendations on devolution. For RAS aspirants, the index is relevant to understanding cooperative federalism, state fiscal responsibility under the FRBM Act, CAG's audit role, and Rajasthan's budgetary priorities under the Viksit Rajasthan agenda.