Knowledge Nugget | Fiscal Health Index 2026: Key highlights for UPSC and other competitive exams

Take a look at the essential events, concepts, terms, quotes, or phenomena every day and brush up your knowledge.

Here’s your UPSC Current Affairs knowledge nugget for today on Fiscal Health Index 2026.

(Relevance:Reports and indices are important markers of understanding a country’s progress.

Previously, from time to time, UPSC has asked questions about various reports and indices.

The key highlights of these reports are also important for adding value to your Mains answers.

In this regard, the comprehensive understanding of reports and indices becomes essential for your exam.)
Recently, NITI Aayog released the Fiscal Health Index (FHI) 2026 for the Financial Year 2023-24.

This is the second edition of the FHI, which assesses the state-level fiscal performance in India by expanding coverage to the North-Eastern and Himalayan states and refining indicators to better capture fiscal sustainability.

In this context, let’s know the key highlights of the index.

1.

The Indian states play a critical role in resource allocation to essential sectors such as agriculture, poverty alleviation, human development, urbanization, and infrastructure.

Effective fiscal management in these areas can stimulate growth, enhancesocial welfare, and promote regional economic convergence.

2.

In this context, the Fiscal Health Index serves as a comprehensive framework for assessing and comparing the fiscal performance of Indian states.

3.

The first edition of the Index focused on 18 major states.

The 2nd edition evaluates not only the 18 General Category States but also the 10 North-Eastern (NE) and Himalayan States, making the Index more inclusive and representative of India’s fiscal diversity for 2023-24.

The inclusion brings focus to fiscal patterns shaped by geographic remoteness, demographic characteristics, and higher service delivery costs.

4.The FHI continues to use the five fiscal pillars to measure the fiscal health of states.

The five pillars are: quality of expenditure, revenue mobilisation, fiscal prudence, debt index, and debt sustainability.

5.

Odisha remains the top performer, improving its score over the previous year, with Goa and Jharkhand also featuring among the top Achiever states.

Gujarat and Maharashtra continue in the top five.

6.

Haryana records a notable year-on-year improvement of three ranks.

Bihar, Karnataka and Telangana show a mild recovery, whereas Punjab, West Bengal and Kerala remain at the bottom of the rankings.

7.

Overall, higher-ranked states display stronger fiscal discipline and resource mobilisation efforts, while lower ranked states exhibit higher non-developmental expenditure and less sustainable fiscal patterns.

8.

The Achiever group (Odisha, Goa and Jharkhand) is characterised by high own- tax shares (above 60%), relatively large capital outlay (around 4-5% of GSDP), low fiscal deficits (below 3% of GSDP), moderate debt levels (under 25% of GSDP) and contained interest burdens.

9.

Front-Runner states are Gujarat, Maharashtra, Chhattisgarh, Telangana, Uttar Pradesh and Karnataka.

Whereas Performer states are Madhya Pradesh, Haryana, Bihar,Tamil Naduand Rajasthan.

10.

Aspirational states in the index are West Bengal, Kerala, Andhra Pradesh and Punjab.

These states face persistent revenue and fiscal deficits often breaching FRBM norms, elevated debt levels of roughly 35-45% of GSDP, committed expenditure accounting for about 50-60% of revenue receipts, large interest payments exceeding 15-20%, and relatively low developmental spending.

1.

The NE /Himalayan States have been ranked separately from the major states and classified into three groups i.e.,
(i) Achievers:Arunachal Pradesh, Uttarakhand
(ii) Performers:Assam, Meghalaya, Mizoram, Sikkim, Tripura
(iii) Aspirational:Himachal Pradesh, Manipur, Nagaland
2.

Arunachal Pradesh ranks highest,followed by Uttarakhand and Tripura, reflecting stronger expenditure quality, revenue capacity and debt management, whereas Himachal Pradesh and Manipur remain at the bottom due to weak revenues and persistent fiscal stress.

1.

The NITI Aayog’s SDG India Index for SDGs evaluates progress of states and Union Territories (UTs) on various parameters including health, education, gender, economic growth, institutions, climate change and environment.

First launched in December 2018, the index has become the primary tool for monitoring progress on the SDGs in India.

2.

The SDG India Index scores range between 0–100, higher the score of a State/UT, the greater the distance to target achieved.

States and UTs are classified in four categories based on their SDG India Index score — aspirant: 0–49; performer: 50–64; front-runner: 65–99, achiever: 100.

According to the NITI Aayog SDG index,India’s score for 2023-24 was 71.

With reference to the Fiscal Health Index (FHI), consider the following statements:
1.

It is released by the Reserve Bank of India.

2.

The index assesses the fiscal performance of Indian states.

3.

The FHI 2026 expanded coverage to include North-Eastern and Himalayan states.

Which of the statements given above is/are correct?

🚨Click Hereto read the UPSC Essentials magazine for February 2026.

Share your views and suggestions in the comment box or at manas.srivastava@indianexpress.com🚨
Roshni Yadav is a Deputy Copy Editor with The Indian Express.

She is an alumna of the University of Delhi and Jawaharlal Nehru University, where she pursued her graduation and post-graduation in Political Science.

She has over five years of work experience in ed-tech and media.

At The Indian Express, she writes for the UPSC section.

Her interests lie in national and international affairs, governance, the economy, and social issues.

You can contact her via email: roshni.yadav@indianexpress.com....

Read More