CURRENT AFFAIRS
CURRENT AFFAIRS
Description
The Fiscal Health Index (FHI) 2025 is an annual report that evaluates the fiscal stability of Indian states. Its goal is to provide insights that can guide policy interventions, aiming to enhance fiscal governance and strengthen economic resilience at the state level.
Key Aspects Of Fiscal Health Index
The FHI assesses the financial health of 18 major states in India, based on five key sub-indicators:
Quality of Expenditure
Revenue Mobilization
Fiscal Prudence
Debt Index
Debt Sustainability
Each state's overall score is determined by a composite fiscal index derived from these sub-indices, offering a clear view of their fiscal performance and areas of improvement.
Leading States
Odisha ranks first in the FHI with a score of 67.8, followed by Chhattisgarh and Goa with scores of 55.2 and 53.6, respectively. These states exhibit strong fiscal health, owing to effective revenue generation and prudent expenditure management, setting a standard for other states to emulate.
States Requiring Improvement
While Jharkhand has made strides in debt sustainability and fiscal prudence, Karnataka faces difficulties in expenditure management and handling its debt load. These disparities underline the need for state-specific reforms tailored to address individual fiscal challenges.
Significance Of Fiscal Health Index
The FHI acts as a valuable tool for states to achieve fiscal stability and encourages transparency in resource management. It provides an analytical framework to help policymakers assess and improve fiscal health, aligning their strategies with broader national goals.
Cooperative Federalism And Fiscal Responsibility
The FHI underscores the importance of cooperative federalism, highlighting the need for collaboration between the central and state governments to reduce regional disparities and foster equitable economic development.
Future Outlook
Aligned with India’s long-term vision of becoming a developed nation by 2047, the FHI encourages fiscal discipline and competition among states. It aims to create a fiscally stable environment that supports sustainable growth, providing valuable data to guide decision-making for a prosperous India.
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