The second annual edition of the Fiscal Health Index 2026 has been released in New Delhi by NITI Aayog. The index assesses the fiscal performance of state of Indias through a data-driven framework designed to support benchmarking, reforms and evidence-based policymaking. It is intended to strengthen fiscal discipline and improve long-term public finance management across states.
What the Index Measures
The Fiscal Health Index provides a comparative assessment of state finances. It evaluates fiscal soundness using indicators linked to revenue, expenditure, debt and overall fiscal management. The framework helps identify strengths and weaknesses in state-level public finance systems.
Expanded Coverage in 2026 Edition
The second edition broadens the scope of the exercise.
- The first edition covered 18 major states.
- The 2026 edition also includes 10 North-Eastern and Himalayan states.
- These states are assessed separately because of structural and regional differences.
- The wider coverage makes the index more representative of India’s fiscal diversity.
Key Fiscal Concerns Highlighted
The report notes wide variation in fiscal outcomes across states. Many major states recorded moderate changes in fiscal health in 2023-24 compared with the previous year. The index marks several policy priorities:
- Improving revenue mobilisation and state own-tax capacity.
- Rationalising committed expenditure to restore fiscal flexibility.
- Enhancing the quality and composition of capital expenditure.
- Using medium-term fiscal planning to manage deficits and debt.
- Strengthening public financial management and transparency.
- Monitoring off-budget borrowings more closely.
Significance for Fiscal Stability
State governments play a major role in India’s fiscal architecture. They account for nearly one-third of general government debt, making their financial health central to national stability. The index is meant to help states identify structural fiscal challenges, improve resilience and support sustainable development.
Last Modified: April 28, 2026