Policymakers must tune more into States, says Finance Commission Chief Panagariya

India’s policymakers and thinktanks ought to concentrate on learning the States much more, Arvind Panagariya, Chairman of sixteenth Finance Fee advised on Friday 

He was talking at a launch occasion of first ever ‘Fiscal Well being Index 2025’ report ready by NITI Aayog. 

“Though one, together with the media, tends to conveniently focus solely on the Centre, we have to pay lot extra consideration and get entangled within the work of States. That is the place in the end the motion on the floor stage is,“ Panagariya mentioned after releasing the Inaugural situation of FHI report within the capital. 

He famous that Fiscal Well being Index initiative could be an annual train. 

The report supplies a complete evaluation of the fiscal well being of 18 main States, based mostly on 5 key sub-indices—high quality of expenditure, income mobilisation, fiscal prudence, debt index, and debt sustainability, together with insights into state-specific challenges and areas for enchancment.

The FHI goals to throw mild on the fiscal standing on the sub-national stage and information coverage reforms for sustainable and resilient financial progress. 

State ranks

With a cumulative rating of 67.8, Odisha tops the rating in fiscal well being amongst 18 main States, adopted by Chhattisgarh and Goa with scores of 55.2 and 53.6, respectively. The achiever States show robust fiscal well being, excelling in income mobilisation, expenditure administration, and debt sustainability. Enhancements are seen in states like Jharkhand, which has strengthened fiscal prudence and debt sustainability, whereas Karnataka faces a decline resulting from weaker efficiency in expenditure high quality and debt administration. 

These interstate disparities spotlight the necessity for focused reforms to handle particular fiscal challenges and guarantee sustainable progress.

The FHI is designed to help policymakers by providing insights into states’ fiscal well being and serving to determine areas requiring intervention and strategic planning.

Steady fiscal path

Panagariya underscored the necessity for the States to comply with a secure fiscal path for balanced regional growth, long-term fiscal sustainability, and prudent governance. 

He talked about that the FHI provides a complete and systematic method to measuring state-level fiscal efficiency and supplies precious insights into broader fiscal traits, permitting for a greater understanding of fiscal well being throughout the nation. 

He emphasised that the FHI report helps to advertise a extra built-in method to fiscal well being and sustainable progress, reinforcing the shared duty of each ranges of presidency in attaining nationwide prosperity.

Talking on the event, Suman Bery, Vice Chairman, NITI Aayog emphasised that the FHI provides a roadmap for attaining fiscal consolidation, bettering transparency, and fostering efficient useful resource administration. He additional said that FHI is just not merely a rating however a device designed to evaluate and thereby enhance the fiscal well being of States. It supplies a framework to guage the monetary well-being of state economies by way of key fiscal indicators. 

NITI Aayog CEO BVR Subrahmanyam highlighted that the FHI report will probably be instrumental in serving to policymakers make knowledgeable selections. He famous that the report supplies an goal image of the fiscal panorama throughout states and in addition provides actionable insights for strengthening fiscal resilience and making certain sustainable financial growth of the States. By specializing in main fiscal indicators, the FHI encourages states to align their fiscal methods with nationwide targets, making certain their contributions to the purpose of a fiscally secure and affluent India and, most significantly, selling wholesome competitors amongst states. 

He pressured that the FHI’s findings are aligned with India’s broader imaginative and prescient of attaining “Viksit Bharat @2047,” the place fiscal self-discipline on the state stage performs a pivotal position within the nation’s financial transformation.

NEW  PORTAL ON STATE FINANCES 

Subrahmanyam mentioned in subsequent 15 days Niti Aayog will launch a joint portal with NCAER the place one would get lot of actual time knowledge on State funds. NCAER has been supporting authorities within the evaluation of State funds and this portal would function a “one-stop- store” for all knowledge of State Funds, he mentioned.

That is a part of the bigger work in direction of pushing State Funds as much as the forefront after which NITI stepping in to serving to States to maneuver to a fiscal place, he added.