NITI Aayog’s latest Fiscal Health Index (FHI) has flagged Kerala as one of the most fiscally strained states in India. The index, which evaluates the financial performance of 18 major states across five parameters—Quality of Expenditure, Revenue Mobilization, Fiscal Prudence, Debt Index, and Debt Sustainability—ranked Kerala poorly due to concerns over debt sustainability and inefficient expenditure.
While states like Odisha, Chhattisgarh, and Goa emerged as top performers with strong revenue generation and debt management, Kerala, along with Punjab, Andhra Pradesh, and West Bengal, has been categorized among the most fiscally challenged. The FHI aims to promote transparency and encourage states to adopt sound financial management practices.
Experts suggest that Kerala must implement urgent fiscal reforms to improve debt sustainability and revenue mobilization. Strengthening fiscal prudence and enhancing the quality of expenditure are seen as essential measures for achieving long-term financial stability.
NITI Aayog’s FHI acts as a diagnostic tool, highlighting fiscal disparities among states while providing a roadmap for sustainable economic growth and stability. The report is a wake-up call for Kerala and other underperforming states to prioritize fiscal health.
