Southern states fall behind in fiscal health; Andhra, Kerala at the bottom

The Fiscal Health Index (FHI) evaluates states on expenditure quality, revenue mobilisation, fiscal prudence, debt index and debt sustainability.
The report titled ‘Fiscal Health Index 2025’ covers 18 States, highlighting their impact on India’s GDP, demographics, and revenues
The report titled ‘Fiscal Health Index 2025’ covers 18 States, highlighting their impact on India’s GDP, demographics, and revenuesPhoto: X@NITIAayog
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NEW DELHI: Most South Indian states have been performing poorly in managing their finances, Niti Aayog’s Financial Health Index 2025 showed. Three states – Andhra Pradesh, Kerala and Tamil Nadu – in particular have been performing the worst among southern states as they scored below 30 out of 100 in the Index.

These states were not among top 10 states in terms of the fiscal performance.

Andhra Pradesh and Kerala were among worst performers along with Punjab and West Bengal – each of them, according to Niti Aayog, is facing major fiscal challenges. Kerala and Punjab struggle with low quality of expenditure and debt sustainability, while Andhra Pradesh has high Fiscal deficits, noted Niti Aayog.

Tamil Nadu has a better score when it comes to state own revenue/total expenditure, but it has fared poorly on quality of expenditure and fiscal deficit.

The report titled ‘Fiscal Health Index 2025’ covers 18 States, highlighting their impact on India’s GDP, demographics, and revenues
NITI Aayog’s Fiscal Health Index places Odisha as champion state

In case of Tamil Nadu during 2022-23, committed expenditure as percentage of the revenue expenditure was 52%. “The upward trend on Committed Expenditure since 2018-19, which grew at an annual rate of 9.9%, may have left the Government with lesser flexibility for developmental spending,” noted the Aayog. Subsidies form a high proportion of non-committed expenditure for the state.

Karnataka rank dropped from 3 in 2014- 15 to 2021-22 to 10 in 2022-23, primarily due to subdued performance under Quality of Expenditure and Debt Sustainability. Among the Southern states, Telangana was the best among the Southern states due to better revenue mobilization and fiscal prudence.

The Fiscal Health Index (FHI) evaluates states on expenditure quality, revenue mobilisation, fiscal prudence, debt index and debt sustainability. The composite fiscal health index for 18 major states has been calculated using the data from the Comptroller and Auditor General of India (CAG). The period of the analysis is Financial Year 2022-23.

Odisha excels in the fiscal health Index with the highest overall index score of 67.8. Chhattisgarh and Goa follow, with scores of 55.2 and 53.6, respectively

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