Context :

• The NITI Aayog has released the second annual edition of the Fiscal Health Index (FHI) 2026.
• Key Points :
• Released by: Vice Chairman of NITI Aayog Suman Bery and the Chief Executive Officer (CEO) of NITI Aayog Nidhi Chhibber
• Assessment: In the first Fiscal Health Index, the fiscal performance of 18 major states was evaluated, while in this edition 10 North-Eastern and Himalayan states have also been included.

Fiscal Health Index :

• It is a data-driven framework developed by NITI Aayog to evaluate the financial management and fiscal discipline of states.
• Transparency and Accountability: To promote transparency and fiscal prudence in the ways states spend and mobilize revenue.
• Policy Making: It helps policymakers make better decisions by identifying the financial strengths and weaknesses of states.

Five Major Pillars of Evaluation :

• Quality of Expenditure: The share of a state’s budget spent on creating productive assets.
• Revenue Mobilization: Increase in own tax and non-tax revenue.
• Fiscal Prudence: The ability to keep the fiscal deficit under control.
• Debt Index: The level of outstanding debt on the state.
• Debt Sustainability: The ability to repay debt in the future.

Classification of States :

• Based on the index score, states are divided into four categories.
• Achiever: States with the highest performance.
• Front Runner: States with stable performance.
• Performer: States with moderate performance.
• Aspirational: States with the lowest scores that are facing high fiscal stress.

Key Highlights of FHI 2026 :

• Top ‘Achiever’ States: Odisha, Goa, Jharkhand
• Front Runners: Gujarat, Maharashtra, Chhattisgarh, Telangana, Uttar Pradesh, Karnataka
• Performers: Madhya Pradesh, Haryana, Bihar, Tamil Nadu, Rajasthan
• Aspirational (Worst Performing States): West Bengal, Kerala, Andhra Pradesh, Punjab

North-Eastern and Himalayan States :

• Achievers: Arunachal Pradesh and Uttarakhand
• Performers: Assam, Meghalaya, Mizoram, Sikkim and Tripura
• Aspirational: Himachal Pradesh, Manipur and Nagaland

NITI Aayog :

• It is the premier policy think tank of the Government of India that provides directional and policy inputs.
• NITI Aayog – National Institution for Transforming India
• Establishment: 1 January 2015 (replacing the Planning Commission)
• Nature: It is a non-constitutional and non-statutory body established through an executive resolution of the Union Cabinet.
• Chairperson: The Prime Minister of India (ex-officio).