Niti Aayog's Fiscal Health Index Calls for Rigorous Fiscal Discipline

Niti Aayog stresses adherence to fiscal norms under the FRBM Act for state governments. The 2026 Fiscal Health Index identifies Odisha, Maharashtra, and Gujarat as top fiscally responsible states, urging others to improve tax capacity and manage expenditure for better fiscal health amidst national and international fiscal challenges.

The Niti Aayog has called upon state governments to maintain fiscal discipline by adhering to the Fiscal Responsibility and Budget Management (FRBM) Act norms. This involves effective expenditure management, broadening the GST base, and boosting their tax revenue capabilities.

The recent Fiscal Health Index for 2023-24, released by Niti Aayog Vice Chairman Suman Bery, identifies fiscally prudent states like Odisha, Maharashtra, and Gujarat, while urging others to align revenue expenditures with sustainable growth. The index provides a comparative framework assessing state fiscal performances, highlighting strengths and weaknesses.

To counteract fiscal shocks from both domestic and international sources, state governments are advised to improve revenue mobilization and curb expenditures. Recommended measures include rationalizing subsidies, enhancing capital spending quality, and adopting medium-term fiscal plans to stabilize debt and deficit levels.