Last Updated:January 25, 2025, 00:52 IST
NITI Aayog’s report, released by Arvind Panagariya, chairman of the 16th Finance Commission, which assessed the fiscal health of 18 states (excluding the states having special status), reflects the growing disparities in financial management across the country and also points towards the declining financial discipline
The report and the indices highlight several significant declines in fiscal health for Karnataka and Andhra Pradesh, while Chhattisgarh and Jharkhand have shown remarkable improvement. File pic
Odisha, Chhattisgarh, Goa, and Jharkhand have emerged as the top performers in maintaining fiscal discipline in most of the nine parameters, according to NITI Aayog’s latest Fiscal Health Index (FHI) report. In contrast, West Bengal, Andhra Pradesh, Kerala, and Punjab have been flagged as laggards and the worst-performing states, failing to make any improvement over the past years.
The report and the indices highlight several significant declines in fiscal health for Karnataka and Andhra Pradesh, while Chhattisgarh and Jharkhand have shown remarkable improvement.
NITI Aayog’s report, released by Arvind Panagariya, chairman of the 16th Finance Commission, which assessed the fiscal health of 18 states (excluding the states having special status), reflects the growing disparities in financial management across the country and also points towards the declining financial discipline.
Poor show by Bengal, Punjab, Kerala
Odisha, Chhattisgarh, and Goa secured the top positions due to fiscal prudence, proper expenditure management, higher revenue generation, and lower debt burdens. Jharkhand’s improvement in many parameters, especially in the quality of capital expenditure and revenue mobilisation, reflects its efforts to enhance fiscal responsibility and better allocation of resources.
On the other hand, states like West Bengal and Punjab continue to grapple with soaring debts, unwise expenditure, and inefficient revenue mobilisation, with Punjab’s heavy reliance on subsidies and West Bengal’s rising fiscal deficit intensifying their fiscal stress.
Similarly, Kerala’s high expenditure on welfare schemes and subsidies and Andhra Pradesh’s financial mismanagement have pushed them to the bottom of the rankings. The report further pointed to Karnataka and Andhra Pradesh’s sharp decline in fiscal health, attributed to increased fiscal deficits and declining revenue generation.
Jharkhand, Chhattisgarh script success stories
However, Chhattisgarh and Jharkhand were noted for adopting reforms that improved their fiscal sustainability, including better utilisation of funds and increased development spending.
The Fiscal Health Index report released by NITI Aayog serves as a critical tool to primarily guide policy reforms, encouraging states to adopt sustainable fiscal practices while stressing the need for targeted interventions in underperforming regions.
“It is a diagnostic about which state is going where. It will have detailed analysis. So I think it combines it as an index, which actually feeds it to all of the parameters,” said BVR Subrahmanyam, CEO, NITI Aayog.
The data released by NITI Aayog reveals how the states operate their finances, including their fiscal management, revenue generation, and capital expenditure quality.
“In the current geopolitical situation, there is a lot of uncertainty around us. So it is better to know who is going where. Having aspiration is one thing, and being able to finance the aspiration is another,” he added.
