NITI Aayog released the inaugural Fiscal Health Index (FHI) 2025. Which state topped the index with the highest overall score, indicating strong fiscal management?

Question

Question

This question was previously asked in

RRB NTPC Graduate Level CBT-I Official Paper (Held On: 06 Jun, 2025 Shift 1)

Answer 1

The correct answer is Odisha.

Key Points

NITI Aayog released the inaugural Fiscal Health Index (FHI) 2025 to assess the fiscal management and health of Indian states.
Odisha secured the top position on the Fiscal Health Index with the highest overall score, reflecting its strong fiscal discipline and management.
The index evaluates states based on parameters like revenue generation, expenditure management, debt sustainability, and fiscal prudence.
Odisha’s performance can be attributed to its effective debt management, high revenue mobilization, and prudent financial planning.
It highlights the state's ability to maintain fiscal sustainability while meeting developmental and welfare objectives.

Additional Information

Fiscal Health Index (FHI):
- The FHI is developed to measure the fiscal performance and sustainability of states, promoting transparency and accountability in governance.
- It includes parameters like fiscal deficit, debt-to-GDP ratio, revenue expenditure, and capital expenditure.
- The index aims to encourage states to adopt fiscal discipline and effective resource management.
Odisha’s Fiscal Reforms:
- Odisha has implemented reforms such as digitizing revenue systems and reducing non-priority expenditures.
- The state has focused on increasing its tax base and optimizing public resource utilization.
NITI Aayog:
- NITI Aayog (National Institution for Transforming India) is a policy think tank of the Government of India established in 2015.
- It replaced the Planning Commission and focuses on fostering cooperative federalism by involving states in policy-making.
Debt Sustainability:
- Debt sustainability refers to a state's ability to manage its debt obligations without compromising its developmental priorities.
- High debt-to-GDP ratios can impact fiscal health by increasing interest burdens and reducing funds for welfare programs.