On the afternoon of May 4, Bharatiya Janata Party leader Suvendu Adhikari stood in Kolkata to claim his victory. His party had won West Bengal in a landslide. Adhikari described this as a triumph of Hindutva.Five states and territories were counting votes that day – West Bengal, Kerala, and Tamil Nadu among them, all classified by a government index as “fiscally” failing. Assam, the fourth, governed by the BJP, is not.The Fiscal Health Index is published by NITI Aayog – the government’s principal policy body – in January 2025 and updated in March 2026. It grades 18 major states on fiscal discipline and classifies them into four tiers: achiever, front runner, performer and, at the bottom, aspirational.West Bengal is aspirational. Kerala is aspirational in both editions. Tamil Nadu has been declining, with the index’s 2026 executive summary describing the state as having “slipped further to the Aspirational group” – even though the rankings table in the same document contradicts that claim.
The 2025 fiscal health index. Credit: Press Information Bureau.In March, an editorial in the Economic and Political Weekly, India’s principal social science journal, noted that the states ranked lowest are disproportionately those not governed by the BJP.Odisha ranks first. The state was governed by the Biju Janata Dal from 2000-2024, and now has a BJP government.The fiscal health index was introduced when the rights-based architecture that had governed welfare in India – the legal right to food, to employment, to education – had been steadily reworked for a decade. Central welfare schemes were restructured so that states paid more and controlled less.Coverage under the national food security law was frozen to 2011 population figures, excluding tens of millions added since. The Fiscal Health Index records the fiscal position of states after a decade of these changes and presents that position as evidence of how well state governments managed public money.The ranking has become the frame within which the national conversation about public spending now takes place.What the index measures and rewardsThe Fiscal Health Index measures what states spend, earn from their own taxes, borrow and owe – and presents these as evidence of fiscal discipline or its absence. But there is no way for it to measure why these positions came to be or whether that matters for what the ranking means.Odisha’s strong fiscal position rests substantially on mining royalties – iron ore, coal, bauxite – insulating it from pressures other states face. In 2014, a study of Odisha by the Finance Commission – the constitutional body that determines how Central tax revenues flow to states – noted that Odisha’s fiscal surplus was driven by mining royalties and that its own tax effort was “poor compared to other non-special category states”.But NITI-Aayog’s Fiscal Health Index gives Odisha a near-perfect score on its debt ranking.Kerala is at the other end. The state has spent decades building systems its population depends on: a food distribution network that covers nearly double the number of households the Central government’s scheme allows, a pension system for the elderly and disabled, public health infrastructure that ranks among India’s best.To fund welfare pensions without breaching borrowing limits set by the Finance Commission, Kerala created a state-owned company, the Kerala Social Security Pension Limited, that borrows on the state’s behalf, off the official books. The Comptroller and Auditor General, the Centre’s auditor, classifies this as a transparency failure.The index uses that classification to mark Kerala down. What neither acknowledges is that the company exists because meeting the Finance Commission’s borrowing limit while funding welfare obligations was otherwise impossible. Kerala is penalised for finding a way to do both.Tamil Nadu has operated near-universal food distribution since the 1960s, decades before the Centre made food security a legal right in 2013. Its midday-meal programme is entirely state-funded. But the index records this as committed expenditure that crowds out more productive investment. Tamil Nadu scores 32 out of 100 on expenditure quality; Odisha scores 52.However, Tamil Nadu’s human development record – among India’s strongest on health, education, and food security – suggests that welfare investment and productive investment are the same thing, measured differently.
