Odisha tops Fiscal Health Index by NITI Aayog, praised for effective debt managemen and revenue mobilization

Odisha has emerged as the top performer in the country for fiscal health in the Financial Year 2022-23, according to the recently released Fiscal Health Index (FHI) by NITI Aayog.The state secured the highest overall FHI score of 67.8, ranking No. 1 in the nation for the first time.

The FHI report, which evaluates the fiscal health of Indian states based on key parameters, highlights Odisha’s strong performance in several areas, particularly in Debt Index and Debt Sustainability.

It said “Odisha excels in fiscal health with the highest overall index score of 67.8. It tops the Debt Index (99.0) and Debt Sustainability (64.0) rankings with better than average scores under Quality of Expenditure and Revenue Mobilization”.

The state achieved an outstanding score of 99.0 in Debt Index, indicating its effective debt management, and 64.0 in Debt Sustainability, which reflects its ability to maintain manageable debt levels. Odisha’s fiscal discipline has been key to maintaining low fiscal deficits, a good debt profile, and an above-average Capital Outlay/GSDP ratio.

In addition to its strong debt management, Odisha has performed better than average in two other crucial sub-indices: Quality of Expenditure and Revenue Mobilization.The state has shown significant progress in mobilizing non-tax revenue, especially through mining-linked premiums. On average, Odisha’s own non-tax revenue accounted for 21 per cent of its total revenue, placing it alongside states like Jharkhand, Goa, and Chhattisgarh in effectively leveraging non-tax sources.The state’s ability to prioritize both social and economic services, especially in sectors like health and education, has been another factor contributing to its success.

Odisha’s revenue expenditure on health and education grew at a compound annual growth rate (CAGR) of 33.8 per cent during 2020-2022, outpacing the growth in these areas by major states, which stood at a CAGR of 22.6 per cent.

The NITI Aayog report highlights that Odisha is committed to prudent fiscal management, as it is among the few states in India that have adhered to the Fiscal Responsibility and Budget Management (FRBM) Act’s parameters since 2005.

The state has taken numerous measures to ensure its fiscal indicators remain healthy, with a focus on long-term sustainability.

Overall, Odisha’s performance in the Fiscal Health Index highlights its robust economic management, making it a role model for other states in terms of fiscal prudence and development.