Smita Mishra 
Odisha has made a significant stride in India’s economic landscape by securing the top spot in NITI Aayog’s Fiscal Health Index (FHI) 2025. This achievement underscores the state’s impressive fiscal management, policy innovation, and growing role as a model for other Indian states. At a time when fiscal prudence is critical for sustained growth, Odisha’s rise is both timely and inspiring.
Understanding the Fiscal Health Index
NITI Aayog’s Fiscal Health Index is an annual assessment that ranks Indian states based on their ability to manage finances effectively. The index evaluates multiple parameters, including revenue generation, debt-to-GSDP ratio, fiscal deficit management, and expenditure priorities. Its purpose extends beyond highlighting financial performance, aiming to inspire better fiscal behavior and governance practices across states.
Odisha’s Winning Formula
Odisha’s top rank in the FHI is no fluke, resulting from years of disciplined fiscal policy, smart governance, and bold reforms. Key factors contributing to its success include exceptional revenue mobilization, particularly from mining, and effective debt management. The state has maintained a low debt-to-GSDP ratio through cautious borrowing and strategic allocation of funds to productive capital expenditure. Additionally, Odisha has achieved a balance between development spending and fiscal discipline, investing in crucial sectors like health, education, and infrastructure while controlling subsidies and administrative costs.
Revenue Mobilization and Debt Management
The state’s revenue mobilization efforts, particularly in mining, have been noteworthy. By introducing an auction-based allocation of mining leases, Odisha has leveraged its rich mineral reserves to generate premium revenue, significantly boosting its fiscal independence. This strategic approach has enabled the state to reduce its reliance on central transfers and market borrowings, ensuring a stable financial foundation.
Implications for Odisha’s Growth Story
With its fiscal strength, Odisha is poised to attract investments, fund large-scale infrastructure projects, and support employment schemes. The state has already become a hub for industrial investments from giants like Adani, JSW, and Jindal. Odisha’s top FHI ranking sends a clear message to private players, who prefer states with low fiscal risks and efficient governance. This development is expected to drive growth, create jobs, and improve the overall quality of life for its citizens.
A Model for Other States
Odisha’s achievement serves as a playbook for other Indian states, highlighting the importance of sustainable revenue generation, transparency, and economic discipline. By prioritizing self-reliance and resilience, states can shift their development models toward more effective and efficient governance practices. NITI Aayog officials have noted that Odisha’s approach is a step in the right direction, demonstrating the potential for replication across other states.
Looking Ahead
As Odisha moves forward, maintaining fiscal discipline while scaling up development will be crucial. The state must focus on continued investment in human capital, monitoring environmental impacts of mining-based revenue, and ensuring equitable distribution of wealth across rural and urban areas. By doing so, Odisha can consolidate its position as a fiscally responsible and growth-oriented powerhouse in India.
