Fiscal health rankings can act as policy nudge, encourage states to lower debt ratios: Rao Inderjit Singh

Indian Express

5 days ago

The Fiscal Health Index (FHI) initiative that ranks states by their finances can act as a 'policy nudge' and play a key role in encouraging states to lower their debt-to-Gross State Domestic Product (GSDP) ratios, according to Rao Inderjit Singh, Union Minister of State (Independent Charge) of the Ministry of Statistics and Programme Implementation (MoSPI) and Ministry of Planning. With the central government set to target a reduction in its debt-to-Gross Domestic Product (GDP) ratio from 2026-27 onwards, Singh said 'any fiscal slippage by states can undermine India's sovereign risk profile'.
In an e-mail interview with Siddharth Upasani, the Minister also discussed more frequent revisions to GDP and Consumer Price Index (CPI) data series, the importance of Artificial Intelligence (AI) in data collection, and ramping up recruitment of statistical officers. Edited excerpts:
MoSPI will release the updated series for key macroeconomic indicators such as CPI, GDP, and IIP (Index of Industrial Production) next year. Does the ministry plan to update these key data series on a more regular basis?
The next base year revision exercise of GDP, IIP, and CPI is currently underway. For GDP, the new series is scheduled to be released on February 27, 2026 with 2022-23 as base year. For IIP, 2022 -23 has been tentatively identified as the revised base. IIP on revised base would be released from 2026-27.
For CPI, 2024 has been identified as the revised base year and the item basket and weightage of the items would be decided based on the HCES conducted in 2023-24. The new CPI series is expected to be published from the first quarter of 2026.
MoSPI is exploring the experimental compilation of a chain-based IIP to improve responsiveness to structural changes. The item basket and factory frame of the new IIP series would be selected using the latest data of Annual Survey of Industries (ASI) 2022-23.
HCES serves as the foundation for updating the CPI base. The base updation of CPI relies on HCES for the item basket and their respective weights. Therefore, MoSPI is planning to conduct HCES in about every 3 years. Accordingly, base revision of CPI will be done.
For the new CPI series, MoSPI is expanding its approach by exploring alternative data sources, such as online platforms for airfare, rail fare, OTT (over-the-top) platforms and administrative records for price data of petrol, diesel and LPG. Discussions are ongoing with Indian Railway Catering and Tourism Corporation, the Ministry of Railways, and the Petroleum Planning and Analysis Cell under the Ministry of Petroleum and Natural Gas for direct transfer of data for integration in CPI.
The Ministry is exploring the use of scanner data and web scraping to enhance the accuracy, efficiency, and comprehensiveness of price data collection. The possibility of collecting price data from e-commerce websites is also being considered.
Regarding GDP, annual data in respect of the Government expenditure and private corporate sector are available. However, for the large informal sector in India, the estimates are dependent on various survey results. Attempts are being made to reduce the periodicity of the surveys, like Periodic Labour Force Survey (PLFS) are now available monthly, ASUSE data are being planned to be released quarterly. Pilot has been done on Annual Survey of Service Sector Enterprises (ASSSE).
In addition to the use of data from Office of Controller General of Accounts, MCA-21, Reserve Bank of India, etc. as was done in the previous base revision exercise, use of Goods and Services Tax data, E-Vahan portal, UPI transaction data from National Payments Corporation of India, etc. are also being attempted. With the availability of more datasets, GDP base revision could be done more frequently in the near future.
Could IIP and GDP data be revised with 2023-24 as the base year considering the results of the ASI for 2023-24 is set to be released in September 2025?
The ASI data for 2023-24 is expected to be available in late 2025, which would be too late to be considered for the upcoming base year revision exercise of GDP and IIP.
The first Fiscal Health Index (FHI) rankings of states were published earlier this year. With the central government moving towards targeting debt-to-GDP ratio from 2026-27, can such rankings help push the states to lower their debt ratio?
Yes, the FHI rankings can play a critical role in encouraging states to lower their debt-to-GSDP ratios, especially in light of the central government's target of reducing overall government debt starting 2026–27 to a level of 50 per cent from the existing 57.1 per cent.
The FHI assesses the fiscal performance of Indian states, and is aimed at promoting transparency, accountability, and prudent fiscal management. It evaluates states across four core pillars: revenue mobilisation, quality of expenditure, fiscal prudence, and debt index and sustainability, along with several sub-indicators, to present a holistic picture of fiscal health.
Beyond being a comparative scorecard, the FHI provides state-specific insights, identifying areas of strength and concern and offers a foundation for tailored policy recommendations. It encourages data-driven governance and decision-making, supports targeted fiscal reforms, and underscores the importance of long-term financial sustainability.
Crucially, fiscal prudence at the state level contributes to the overall debt sustainability of the country. Since states form a substantial part of the overall government's fiscal position, their collective discipline plays a vital role in maintaining macroeconomic stability and managing debt risks at the central level as well.
International investors and credit rating agencies view India's fiscal health holistically—they do not distinguish much between Centre and states. Therefore, any fiscal slippage by states can undermine India's sovereign risk profile. Rankings like the FHI offer a credible benchmark to show fiscal discipline at the sub-national level, which can boost confidence among investors and agencies. With India shifting to a debt-to-GDP anchor post 2025–26 and inclusion in the JPMorgan Emerging Market Debt Index drawing ~$8 billion in inflows, transparent metrics like the FHI can boost investor confidence and align with global fiscal standards.
Public rankings push weaker states to improve and emulate top performers. FHI rankings act as a policy nudge, a reputational signal, and a planning tool for states. If leveraged well, they could contribute meaningfully to India's broader macroeconomic stability and fiscal consolidation goals.
MoSPI has historically suffered from being understaffed. Has the lack of statistical officers been a hurdle for the ministry? Is the reliance on contract staff sustainable?
MoSPI has shifted all its surveys to Computer Assisted Personal Interview (CAPI) mode integrated with a digital platform having in-built validation replacing the traditional paper-pen method. In the month of May, through the Staff Selection Commission, 700 Junior Statistical Officers got recruitment for posting in different Regional Offices of the National Statistics Office (NSO). Moreover, survey-specific engagement of contractual staff is being made with multi-level training focusing more on the quality of the data.
The government has developed the Multidimensional Poverty Index (MPI) to measure poverty. But now that we have the results of 2022-23 and 2023-24 HCES, is there a plan to update the Tendulkar poverty line of 2009 and the Rangarajan Committee line of 2014?
The release of the latest HCES data for 2022–23 and 2023–24 marks an important development, as it offers an updated view of consumption patterns across Indian households. Discussions on poverty measurement frameworks continue to evolve in academic and policy circles. These are technical and evolving subjects, and any future developments would be shaped by a range of considerations, including evolving national priorities.
The National MPI currently serves as a robust tool for monitoring the multiple dimensions of deprivation, offering granular insights across 36 States/Union Territories and over 700 districts.
MoSPI, in the last couple of years, has been extremely active in conducting surveys and publishing reports in a time-bound manner. What led to this urgency and how has it managed to increase its capacity to do so many surveys at the same time?
As Prime Minister Shri Narendra Modi has said, 'We must become tech-savvy, so that every policy and scheme can be made more efficient and accessible through technology. We must become experts in data-driven decision-making, so that policy design and implementation become more accurate'. MoSPI is adapting technology including AI/ML (Artificial Intelligence/Machine Learning) in its generation of statistical products and taking a lead role to provide the required data to the policymakers in time so that accurate policies could improve the quality of life of Indians.
MoSPI has shifted from pen-paper-mode data collection to tablets through CAPI in the National Sample Surveys (NSS). The CAPI has provision for in-built data validation and other features of survey administration that enables faster processing and finalisation of the survey data. Data collection can be done both online and offline. In-house software is also developed for data validation, multiplier calculation, table generation and RSE (Relative Standard Error) calculation etc. for the NSS. Some features of AI/ML enabled chatbot have been included in some of the surveys like ASUSE (Annual Survey of Unincorporated Sector Enterprises) and CAPEX survey, etc.
With the use of CAPI, the time period for dissemination of the results and the data of the surveys post the conduct of the survey could be reduced to a great extent. For example, the Comprehensive Modular Survey: Telecom was conducted from January to March 2025 and the results of the same have been released in May 2025, within two months' time frame.
MoSPI has started disseminating the advance Annual Release Calendar for all its statistical products since 2024-25 on its website. Data users are able to see the release of the data following the calendar.
MoSPI is looking at ways to use alternative data in official statistics. What is being done to make the private sector, which generates a lot of these data sets, a willing partner in the creation of indicators based on these new data?
MoSPI has recently organised a workshop on using alternate data sources and frontier technologies for policymaking. A number of private sector partners along with stakeholder Ministries and reputed research institutions participated in the workshop. The Ministry is taking feedback from stakeholders in this regard. Further, the Ministry has set up a Data Innovation Lab to promote innovation and adoption of Information Technology in the field of official statistics. A number of private sector experts and reputed academic institutions are taking part in the Data Innovation Lab.
AI is being employed more and more to compile data and information. While MoSPI is using AI chatbots in tablets used for CAPI to help provide prompts, what is the future of Artificial Intelligence when it comes to MoSPI's work?
The Ministry has already started working in this area. Some features of AI/ML enabled chatbot have been included in some of its surveys like ASUSE and CAPEX survey, etc. To facilitate self-compilation by enterprises in the web-portal based CAPEX survey, an AI-powered chatbot has been integrated into the portal. This chatbot assists respondents by providing guidance on the concepts used across various sections of the CAPEX survey questionnaire. The chatbot, developed using Natural Language Processing techniques, is designed to offer seamless assistance throughout the survey process. This feature has also been incorporated into the ASUSE, launched in January.
While the traditional mode of data collection like survey, use of administrative data etc. would continue, the use of AI is expected to strengthen the statistical system. The ministry is working to integrate AI into the official statistical system in collaboration with startups and educational institutions in the form of pilot projects to develop an AI-based tool for rejuvenating legacy data, chatbot, classification etc. under Data Innovation Lab.
India is targeting becoming a developed country by 2047. The use of statistics will be crucial in this process as government policies are guided by data. What conversations have you had with the Prime Minister's Office and other key ministries regarding the role MoSPI will play in the coming 20 years?
The Government under the leadership of the Prime Minister is emphasising on data-driven policy decisions to improve the quality of lives of the citizens of the country. As per the allocation of business rule of the Ministry, it acts as the nodal agency for planning integrated development of the statistical system in the country. In this process, the Ministry regularly interacts with the stakeholder Ministries/Departments.
With adaptation of modern technologies and timely release of statistical products including the survey results on required aspects, the Ministry is playing a key role in data-driven decision making by the government in the journey towards Viksit Bharat 2047 as envisaged by the Hon'ble Prime Minister.
Siddharth Upasani is a Deputy Associate Editor with The Indian Express. He reports primarily on data and the economy, looking for trends and changes in the former which paint a picture of the latter. Before The Indian Express, he worked at Moneycontrol and financial newswire Informist (previously called Cogencis). Outside of work, sports, fantasy football, and graphic novels keep him busy.
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