NITI Aayog’s Fiscal Health Index

• 28 Jan 2025

Why in News? 

NITI Aayog’s Fiscal Health Index (FHI) 2025 report ranked Haryana 14th, placing it among the bottom five of 18 major states.  

• The ranking considers five parameters: quality of expenditure, revenue mobilisation, fiscal prudence, debt index, and debt sustainability. 

 Key Points 

• Scope of FHI: 
  • The index covers 18 major states contributing significantly to India’s Gross Domestic Product (GDP), demography, public expenditure, revenues, and fiscal stability. 
  • It evaluates fiscal performance over the period from 2014-15 to 2022-23. 
• Haryana’s Performance:  
  • Debt Profile and Concerns: 
    • Haryana’s debt-to-GSDP ratio rose from 26% in 2018-19 to 33% in 2020-21, stabilising at 31% in 2022-23. 
    • Interest payments grew by 9.4% in 2022-23, with the interest payment-to-revenue receipt ratio at 23%. 
    • Haryana ranked 15^th on the Debt Index parameter, ahead of only Kerala, West Bengal, and Punjab. 
• Revenue and Fiscal Deficits: 
  • Haryana’s revenue deficit stood at 1.7% of GSDP in 2022-23, failing to meet the 15^th Finance Commission’s recommendations. 
  • Fiscal deficits from 2017-18 to 2021-22 were primarily financed through public debt, including market borrowings and loans from the Central government. 
• Quality of Expenditure: 
  • Haryana ranked 16^th in quality of expenditure, with a score of 24.8, ahead of only Punjab and Kerala. 
  • Capital expenditure growth compared to GSDP has declined since 2018-19, constituting just 1.4% of GSDP in 2022-23, below budget estimates. 
  • Capital expenditure as a share of total expenditure fell from 16.4% in 2018-19 to 9.7% in 2022-23. 
• Recommendations for Haryana: 
  • Increase capital expenditure on social services. 
  • Enhance tax collection efficiency. 
  • Establish a robust fiscal management framework, focusing on debt sustainability. 
  • Broaden the revenue base and rationalise expenditures to improve short- and medium-term fiscal sustainability.