Panjab Ranks 18th Among Indian States on Fiscal Health Index

The Fiscal Health Index (FHI) 2022–23 report by the National Institution for Transforming India Aayog (commission) ranks Panjab as the worst-performing state among India’s 18 major states. Panjab has a score of 10.7, far below topper Odisha’s 67.8. As of December 2024, Panjab’s outstanding public debt reached USD 42.9B. Panjab struggles with quality of expenditure, fiscal prudence, and debt index. However, it must also be noted that like Panjab, the other states that feature at the bottom of the table—Kerala and West Bengal—have also never been ruled by the Bharatiya Janata Party (BJP). While the report, covering data from 2014-15 to 2022-23, reveals the need for transparency, better tax compliance, and targeted investments to improve fiscal stability, it also reveals the skewed relationship these states have with the Union government. The Shiromani Akali Dal (SAD) has blamed CM Bhagwant Singh Mann and the Aam Aadmi Party (AAP) government for the fiscal crisis, accusing them of diverting public funds, reducing spending on health and education, and mismanaging state finances. Adding to the fiscal woes, Panjab has overshot its revenue deficit target by USD 60.7M in the first three quarters of the current fiscal, with grants-in-aid from the Union government dropping sharply from USD 1.3B to USD 675M. The state has also raised USD 3.2B in loans against its annual limit of USD 3.5B, leaving little room for further borrowing. Now, Panjab has sought USD 69.4M from the Union government to set up special Narcotic Drugs and Psychotropic Substances Act courts to address the backlog of 35K drug-related cases. Citing Panjab’s vulnerable geography and cross-border trafficking challenges, the state has also requested USD 1B from the 16th Finance Commission to combat narco-terrorism and drug abuse.