NITI Aayog released the second annual edition of the Fiscal Health Index (FHI) 2026 in March 2026, evaluating the fiscal performance of Indian states for the financial year 2023-24. The index uses audited data primarily sourced from the Comptroller and Auditor General (CAG) of India to generate comparable scores and rankings for states across multiple fiscal dimensions. The FHI 2026 assesses 18 major states and 10 North-Eastern and Himalayan states across five critical pillars: Quality of Expenditure, Revenue Mobilisation, Fiscal Prudence, Debt Index, and Debt Sustainability. Among major states, Odisha emerged as the top performer for the second consecutive year, attributable to its fiscal deficit maintained within the 3% FRBM norm, strong mining-linked non-tax revenues, and capital outlay of around 4-5% of GSDP. Arunachal Pradesh topped the North-Eastern and Himalayan category. At the other end, Punjab and Kerala remain in the Aspirational category, facing severe fiscal stress. Punjab's committed expenditure reached 80% of revenue receipts in 2023-24, severely restricting discretionary spending. Kerala continues to face elevated debt and interest commitments. The index provides policy priorities including strengthening revenue mobilisation, rationalising committed expenditures, improving capital expenditure quality, and enhancing medium-term fiscal planning. The FHI is significant as it encourages competitive fiscal federalism among states and serves as a diagnostic tool to identify states needing fiscal consolidation support from the Centre. Rajasthan's performance in the index reflects the need to balance development expenditure with fiscal prudence.