NITI Aayog released the second edition of its Fiscal Health Index (FHI) 2026, assessing the fiscal performance of Indian states for financial year 2023-24. The index uses audited data from the Comptroller and Auditor General of India (CAG) to score states across five pillars: Quality of Expenditure, Revenue Mobilisation, Fiscal Prudence, Debt Index, and Debt Sustainability.\n\nOdisha topped the rankings for the second consecutive year among major states with a score of 73.1, followed by Goa (54.7) and Jharkhand (50.5). Arunachal Pradesh led in the North-Eastern and Himalayan States category. The 2026 edition expanded coverage to include 10 North-Eastern and Himalayan states in addition to 18 major states, making it more comprehensive than the first edition.\n\nRajasthan's performance showed a mixed picture. The state remained in the Performer category overall but registered a notable improvement: it moved from Performer to Front Runner on the Quality of Expenditure pillar, signalling better allocation and utilisation of public spending. However, Rajasthan was among the bottom six states in the overall FHI rankings, reflecting ongoing challenges in revenue mobilisation and debt sustainability — a legacy of successive state governments prioritising populist schemes.\n\nThe FHI 2026 report recommends that states ensure timely auditing and publication of financial data by CAG, improve disclosure on contingent liabilities, guarantees, and public enterprises, and adopt multi-year fiscal frameworks. The index is used by the Finance Commission and Union ministries to assess states' fiscal readiness for devolution and grant allocation.\n\nFor RAS aspirants, the FHI is significant in the context of Indian fiscal federalism, state finance management, the role of CAG as a constitutional body (Article 148), and Rajasthan's specific fiscal situation under the current government's development agenda.