According to the Financial Health Index 2025 by Niti Aayog, the majority of South Indian states have been doing a poor job of managing their finances. With scores below 30 out of 100, 3 southern states—Andhra Pradesh, Kerala, and Tamil Nadu—are some of the worst performers.
These states' fiscal performance did not place them in the top 10. Andhra Pradesh, Kerala, Punjab, and West Bengal were among the worst performers.
Poor performers in FHI Have serious fiscal debts
Niti Aayog claims that all of these states are dealing with serious financial difficulties. Andhra Pradesh has significant fiscal deficits, while Punjab and Kerala struggle with low-quality spending and debt sustainability, according to Niti Aayog.
Tamil Nadu has performed poorly in terms of spending quality and fiscal deficit, but it has a higher score when it comes to state own revenue and total expenditure.
Tamil Nadu performance
During 2022–2023, Tamil Nadu's committed expenditures as a percentage of revenue expenditures were 52 per cent. The Aayog observed that the government may have had less money available for developmental spending as a result of the upward trend in committed expenditures since 2018–19, which increased at an annual rate of 9.9 per cent. The state spends a large amount of its non-committed funds on subsidies.
Due mostly to poor performance under Quality of Expenditure and Debt Sustainability, Karnataka's ranking fell from third in 2014–15 to tenth in 2021–22. Because of its superior fiscal prudence and revenue mobilization, Telangana was the best state in the South.
Front runners in FHI (Fiscal health Index)
With the highest overall index score of 67.8, Odisha achieves exceptional results in the fiscal health index. With respective scores of 55.2 and 53.6, Chhattisgarh and Goa come next.
About Fiscal health Index
States are assessed according to the Fiscal Health Index (FHI), which takes into account factors like debt sustainability, fiscal prudence, revenue mobilization, and expenditure quality.
The Comptroller and Auditor General of India (CAG) data was used to make the composite fiscal health index for the 18 largest states. The Financial Year 2022–2023 is the time frame for the analysis.
