TL;DR India’s states drive most public spending, but their fiscal health varies widely. The Fiscal Health Index by NITI Aayog highlights this divide across spending quality, revenue, deficits, and debt. Odisha leads with a strong, consistent performance, far ahead of peers like Goa and Jharkhand. Over time, some states have improved sharply, while others, such as Andhra Pradesh, Tamil Nadu, and Punjab, have declined due to weaker fiscal discipline.

Context

Every year, Indian state governments collectively spend two-thirds of all public money on hospitals, schools, roads, and salaries. But not all states do this well. Some run tight budgets, invest in infrastructure, and keep their debt manageable. Others are caught in a spiral of borrowing, mounting interest payments, and shrinking room for actual development.

NITI Aayog’s Fiscal Health Index, now in its second edition, puts hard numbers on this divergence. It scores 18 major states and, for the first time, 10 North Eastern and Himalayan states on five dimensions: how well they spend, how much they earn on their own, how prudent their deficits are, how heavy their debt is, and whether that debt is sustainable long term.

In this article, we shall explore the key findings from the latest Fiscal Health Index rankings.

Who compiles this data?

The data on fiscal health of states is compiled by the NITI Aayog under its Fiscal Health Index (FHI) ranking, where states are ranked based on their scores in the ranking.

Where can I download clean & structured data related to this?

Clean, standardised, structured, and ready-to-use datasets based on these rankings are exclusively available on Dataful. 

Key Insights

Odisha tops the chart once more, miles ahead of the next state

Odisha sits alone at the top with a score of 73.1, a full 18 points above second-placed Goa. It has consistently held the first rank for a decade and has actually improved over the previous year (from 67.4). Its secret: high-quality expenditure, prudent fiscal management and a strong debt profile. It is proof that poorer states can still be fiscally disciplined. Goa (54.7) and Jharkhand (50.5) make up the Achiever category alongside Odisha. Goa’s strength is its high own-tax base and low debt. Jharkhand, often overlooked, has a capital outlay of 4–5% of GSDP, among the highest in India, reflecting genuine investment in infrastructure.

State-level divergence observed: gains in Odisha & Jharkhand, declines in Tamil Nadu and Andhra Pradesh

A comparison of FHI data from the average scores of 2014–15 to 2016–17 with the latest 2023–24 score presents a clear picture. It separates states that have genuinely reformed from those that have declined or failed to keep pace.

In the earlier period, Karnataka ranked third, but has now slipped to ninth. Andhra Pradesh has moved from 11th to 17th. In contrast, Jharkhand has risen sharply from 13th to third. Odisha’s score has improved significantly from 51.8 to 73.1. Punjab, however, has declined from 19.9 at the start of the decade to 12.4. These changes are not minor variations. They reflect years of accumulated policy decisions, revenue strategies, and borrowing patterns.

Jharkhand stands out for one of the greatest improvements, moving from a score of 36.8 and rank 13 to 50.5 and rank 3. Maharashtra has improved from 12th to 5th place, while Karnataka has dropped from 3rd to 9th. States such as Andhra Pradesh, Tamil Nadu, and Kerala show consistent downward trends when compared to their earlier averages.

The declines in Karnataka and Madhya Pradesh are particularly notable because both began from relatively strong positions. Their trajectories suggest that fiscal strength can weaken over time if not maintained. A strong FHI score is not permanent and requires continued discipline.

Punjab presents the most concerning case. Its performance has steadily worsened over the past decade. While the index categorises it as “Aspirational,” the situation appears more pressing. In contrast, Jharkhand’s progress shows that even states with limited economic resources can achieve meaningful fiscal improvement with sustained effort.

Beyond the Composite Score: What each sub-indicator actually says state by state

The composite FHI score is a weighted aggregate, useful for ranking, but it can mask significant divergence underneath. A state can rank 7th overall while being near the bottom on one specific sub-indicator. Understanding which sub-indicators drive which states’ scores reveals where reform pressure is highest and where states have hidden strengths that the headline number doesn’t capture.

Across key sub-indicators, clear patterns emerge. In Quality of Expenditure, Odisha and states like Jharkhand and Madhya Pradesh perform well due to higher developmental and capital spending, while Punjab and Kerala lag because of high committed expenditure. In Revenue Mobilisation, Goa, Odisha, and Telangana lead with strong own-revenue capacity, whereas Bihar, West Bengal, and Andhra Pradesh remain weak and dependent on transfers.

In Fiscal Prudence, Odisha stands out with better deficit control, while Punjab and Andhra Pradesh perform poorly. For the Debt Index and Debt Sustainability, states like Odisha, Gujarat, and Maharashtra manage debt better, whereas Punjab, Kerala, and West Bengal face high debt and interest burdens. Overall, Odisha consistently performs best across indicators, while Punjab, Kerala, and West Bengal rank among the weakest.

Why does it matter?

The FHI is ultimately a mirror. It shows India’s states not as they wish to be seen, but as they actually are, ranked by their financial governance. States that score well on this index don’t always have the most resources. They have the most discipline. And in a world where public debt is approaching the danger zone globally, that discipline is what separates states that will fund their own futures from those that will mortgage them.

Growing as a nation requires every state to be a contributor, not a liability. That means the distance between Odisha (73.1) and Punjab (12.4) is not just a policy problem but a national risk.

Key Numbers

• Top and bottom performers (2023–24 scores)

  • Top 3: Odisha (73.1), Goa (54.7), & Jharkhand (50.5)

  • Bottom 3: Punjab (12.4), Andhra Pradesh (23.1), & West Bengal (23.8)

• Biggest changes in scores (2014-15 to 2016-17 vs 2023–24)

  • Top 3: Odisha (21.3), Jharkhand (13.7), & Maharashtra (7.3)

  • Bottom 3: Andhra Pradesh (-14.8), Tamil Nadu (-10.7), Madhya Pradesh (-10.4)

• North Eastern states snapshot

  • Strong performers: Arunachal Pradesh (59.5), Uttarakhand(52.5), Tripura(44.1)

  • Lower performers: Manipur (17.6), Himachal Pradesh (22.0), Nagaland (27.1)