NITI Aayog's fiscal health index needs clarity and better data use

Despite fact that Constitution assigns states predominant role in provision of social services and co-equal responsibility in economic services, their fiscal performance has not received much focus

By and large, in India, fiscal performances are judged from the viewpoint of tax policy, on the one hand, and the deficits and debt of the Union government, on the other. Of course, the focus on deficits and debt is important for macroeconomic stability and growth, and analysis of tax policy is important because it affects disposable incomes, aggregate demand, and relative prices. Despite the fact that the Constitution assigns the states a predominant role in the provision of social services and co-equal responsibility in economic services, their fiscal performance has not received much focus. In this regard, the recent