NITI Aayog released the Fiscal Health Index (FHI) 2025, ranking 18 major states across India on the quality of their public finances. The index is based on data audited by the Comptroller and Auditor General of India (CAG) and evaluates states on five key pillars: (1) Fiscal Prudence — adherence to FRBM targets; (2) Debt Management — trends in fiscal deficit and outstanding liabilities; (3) Quality of Expenditure — share of capital outlay and development spending; (4) Revenue Mobilisation — own tax and non-tax revenue performance; and (5) Macro-fiscal Stability — debt-to-GSDP ratio sustainability.
Odisha emerged as the top-ranked state with a composite FHI score of 67.8, reflecting its strong debt management and high capital expenditure relative to total expenditure. Chhattisgarh, Goa, Jharkhand and Gujarat also featured among the Achiever states. Rajasthan was placed in the 'Performer' tier — the middle band — indicating moderate fiscal discipline, with concerns particularly around elevated debt levels and high interest payments as a share of revenue receipts.
The FHI 2025 is significant as it provides a transparent, data-driven framework to benchmark state finances and encourages competitive fiscal responsibility. NITI Aayog aims to use such indices to guide cooperative fiscal federalism and assist states in identifying reform areas. The ranking can influence access to certain centrally-sponsored scheme funds and performance-linked borrowing limits under Article 293 of the Constitution.
For Rajasthan, the index flags the need to improve revenue generation, rationalise subsidies, and boost capital spending to move toward the top tier. The state government has initiated several measures including GST compliance drives and expenditure audits, but sustained improvement depends on reducing its pension and salary burden which currently consumes over 40% of its revenue expenditure.