Dr Kiran Deep
New Delhi, March 11
NITI Aayog has urged Indian states to follow strict fiscal discipline under the Fiscal Responsibility and Budget Management Act (FRBM), warning that widening revenue deficits could weaken their financial stability.
In its Fiscal Health Index (FHI) 2026 report for the financial year 2023–24, the government’s policy think tank said state governments should manage expenditure carefully, broaden the Goods and Services Tax base and improve their own tax collection capacity.
The FRBM framework aims to regulate the country’s debt levels by limiting fiscal and revenue deficits as a share of gross domestic product.
According to the report, states facing rising revenue deficits should prioritise aligning spending with sustainable revenue growth.
The index ranked Odisha, Goa, Jharkhand, Gujarat, Maharashtra, Chhattisgarh, Telangana, Uttar Pradesh, Karnataka and Madhya Pradesh among the top ten fiscally sound states.
Some states, including Bihar, Karnataka and Telangana, showed a modest improvement in their fiscal position.
However, Punjab, West Bengal and Kerala remained among the weakest performers in the index, highlighting persistent fiscal challenges.
The report emphasised that stronger fiscal management and better revenue mobilisation would be essential for states to maintain sustainable economic growth.
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