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Goa ranks second in Niti Aayog fiscal health Index 2026 — Who is No 1?

March 13, 2026 4 min read Economics Polity & Governance GS Paper 2 (Federalism Government Policies) GS Paper 3 (Indian Economy Public Finance)
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What Happened

  • NITI Aayog released the second annual edition of the Fiscal Health Index (FHI) 2026, measuring the fiscal health of Indian states for Financial Year 2023-24.
  • Odisha topped the rankings among major states for the second consecutive year, followed by Goa (2nd), Jharkhand (3rd), Gujarat (4th), Maharashtra (5th), and Chhattisgarh (6th).
  • The top three states — Odisha, Goa, and Jharkhand — are classified as "Achievers" (top performers).
  • This edition expands the index's coverage to include the 10 North-Eastern and Himalayan states, making it more inclusive and representative of India's diverse fiscal landscape.
  • The index uses data from the Comptroller and Auditor General (CAG) and is built on five fiscal pillars.

Static Topic Bridges

NITI Aayog and Its Role in Fiscal Assessment

NITI Aayog (National Institution for Transforming India) was established on January 1, 2015, replacing the Planning Commission. It serves as a policy think tank and advisory body, promoting cooperative federalism and evidence-based policymaking. The Fiscal Health Index is part of NITI Aayog's mandate to use data-driven tools to benchmark state performance and encourage competitive federalism.

  • Established: January 1, 2015 (replaced Planning Commission, abolished 2014).
  • Chairperson: Prime Minister of India (ex-officio); CEO is a senior IAS officer.
  • Functions: Policy advisory, competitive federalism benchmarking, SDG tracking, district development rankings (Aspirational Districts Programme).
  • Other indices published: State Energy & Climate Index, School Education Quality Index, Health Index, SDG India Index, Water Management Index.
  • Unlike the Planning Commission, NITI Aayog has no power to allocate funds — that role belongs to the Finance Commission.

Connection to this news: The FHI is one of NITI Aayog's competitive federalism tools, designed to create peer pressure among states to improve fiscal discipline — a mechanism tested in UPSC questions on cooperative and competitive federalism.

Fiscal Health Index — Five Pillars and Methodology

The FHI evaluates states across five pillars using CAG data: (1) Quality of Expenditure, (2) Revenue Mobilisation, (3) Fiscal Prudence, (4) Debt Index, and (5) Debt Sustainability. The index rewards states that maintain low fiscal deficits, high own-revenue shares, strong capital expenditure ratios, and manageable debt levels.

  • Quality of Expenditure: Share of capital expenditure in total spending vs. committed expenditure (salaries, pensions, interest).
  • Revenue Mobilisation: State's own tax + non-tax revenue generation capacity; reduces dependence on central transfers.
  • Fiscal Prudence: Fiscal deficit and revenue deficit as % of GSDP; adherence to FRBM norms (3% fiscal deficit limit).
  • Debt Index: Outstanding liabilities relative to GSDP.
  • Debt Sustainability: Ability to service debt over the long term without fiscal stress.
  • Data source: Comptroller and Auditor General (CAG) audited accounts.

Connection to this news: Odisha's top ranking is attributed to: fiscal deficit within the 3% FRBM norm (~1.7–2% of GSDP), debt-to-GSDP declining from 23%+ in 2019-20 to mid-teens by 2023-24, and high capital outlay of ~4–5% of GSDP.

Fiscal Responsibility and Budget Management (FRBM) Act

The FRBM Act, 2003, mandates that the central government and states maintain fiscal discipline by capping fiscal deficits and eliminating revenue deficits over time. The 3% of GSDP fiscal deficit ceiling for states is the key norm tested in UPSC.

  • FRBM Act enacted: 2003 (Central); states have their own FRBM Acts.
  • Fiscal deficit ceiling for states: 3% of GSDP (with some escape clauses for capital expenditure during crises).
  • Revenue deficit = Revenue expenditure minus Revenue receipts; FRBM mandates elimination of revenue deficit.
  • The NK Singh Committee (2017) reviewed FRBM and recommended a medium-term fiscal consolidation roadmap.
  • States that adhere to FRBM can access extra borrowing headroom (up to 0.5% of GSDP) under certain conditions.

Connection to this news: The FHI's Fiscal Prudence pillar directly measures FRBM compliance — states scoring high (like Odisha) are those maintaining deficits below the 3% norm, illustrating the real-world impact of fiscal responsibility legislation.

Key Facts & Data

  • FHI 2026 covers data for: Financial Year 2023-24
  • Released by: NITI Aayog (2nd annual edition)
  • Top 3 ranked states: Odisha (1st), Goa (2nd), Jharkhand (3rd); classified as "Achievers"
  • Top 6 states: Odisha, Goa, Jharkhand, Gujarat, Maharashtra, Chhattisgarh
  • Five pillars: Quality of Expenditure, Revenue Mobilisation, Fiscal Prudence, Debt Index, Debt Sustainability
  • Data source: CAG (Comptroller and Auditor General) audited accounts
  • This edition includes 10 North-Eastern and Himalayan states for the first time
  • FRBM fiscal deficit ceiling for states: 3% of GSDP
  • Odisha's fiscal deficit: approximately 1.7–2% of GSDP (well within FRBM norm)
  • Odisha's capital outlay: approximately 4–5% of GSDP
  • NITI Aayog established: January 1, 2015 (replaced Planning Commission)