Fiscal Health Index (FHI)
Why it Matters?
The Fiscal Health Index (FHI) is an initiative by the Ministry of Statistics and Programme Implementation (MoSPI) that ranks Indian states on key fiscal parameters to encourage debt sustainability, promote transparency and accountability in public finance, and support India's macroeconomic stability ahead of the Government of India's 2026–27 debt-to-Gross Domestic Product (GDP) consolidation target.
What You Should Know?
The Fiscal Health Index (FHI) is an initiative by the Government of India to rank states based on their fiscal performance.
FHI serves as a policy nudge to encourage states to reduce their debt-to-GSDP ratios.
It evaluates states across four core pillars:
Revenue mobilization
Quality of expenditure
Fiscal prudence
Debt sustainability
The FHI acts as a comparative scorecard, offering state-specific insights and tailored policy recommendations.
Rankings under FHI aim to boost transparency, accountability, and prudent fiscal management.
The Centre is targeting to reduce the overall debt-to-GDP ratio to 50% by 2026–27 (from 57.1%).
States’ fiscal slippage can impact India’s sovereign risk profile, making sub-national discipline critical.
FHI is also important for international investors and credit rating agencies, as they consider India’s fiscal health holistically.