Context:
NITI Aayog launches the “Fiscal Health Index 2025” in New Delhi.
Fiscal Health Index (FHI):
- Purpose: Evaluates the fiscal health of states to promote balanced regional development and economic stability.
- Assessment: Analyses the fiscal health of 18 major states.
- Key Sub-Indices: Quality of Expenditure, Revenue Mobilization, Fiscal Prudence, Debt Index, and Debt Sustainability.
Key Findings:
- Achiever States (Top Performers) –Odisha leads in fiscal health, excelling in both the Debt Index and Debt Sustainability rankings.
- Other states in the category – Chhattisgarh, Goa, Jharkhand, Gujarat
- Front Runner States – States with strong financial performance –Maharashtra, Uttar Pradesh, Telangana etc.
- Performer States – States with moderate financial health – Tamil Nadu, Bihar, Haryana etc.
- Aspirational States – States like Kerala, West Bengal, and Punjab face significant fiscal challenges, including low quality of expenditure, debt sustainability issues, and revenue mobilization problems.
- Revenue Mobilization – Goa, Telangana, and Odisha are the top performers
- Capital Expenditure – Achiever and Front Runner states allocate approximately 27% of their Developmental Expenditure to Capital Expenditure, whereas Performer and Aspirational States allocate only around 10%.
- Debt Sustainability – States like West Bengal and Punjab have increasing debt burdens, raising concerns about their debt sustainability.
Source: PIB
Previous Year Question
Consider the following:
1. Demographic performance
2. Forest and ecology
3. Governance reforms
4. Stable government
5. Tax and fiscal efforts
For the horizontal tax devolution, the Fifteenth Finance Commission used how many of the above as criteria other than population area and income distance?
[UPSC Civil Services Exam – 2023 Prelims]
(a) Only two
(b) Only three
(c) Only four
(d) All five
Answer: (b)
Explanation:
Criteria for horizontal devolution (Allocation Between the States) include: Income distance, area, population (2011), demographic performance, forest and ecology, and tax and fiscal efforts.
