The Fiscal Health Index: A New Paradigm for Evaluating State Finances in India

With the release of the inaugural "Fiscal Health Index (FHI) 2025" report by NITI Aayog, the conclusions were presented by Arvind Panagariya, Chairman of the 16th Finance Commission. This study article aims to provide a comprehensive analysis of the state's financial situation by categorising them according to their fiscal performance and improving the knowledge of the major indicators used in the FHI. Secondary data, mostly from the FHI report and other newly obtained material, which has been carefully reviewed and evaluated, forms the basis of the analysis. The FHI 2025 evaluates the financial well-being of eighteen notable Indian states. This paper concludes that governments can achieve fiscal discipline, increase revenue generation, and guarantee debt sustainability by 2047. By doing so, they can strengthen their financial positions and back the Atma Nirbhar Bharat and Viksit Bharat goals.