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Finance minister Nirmala Sitharaman has said that a few states including Telangana have sought a five-year extension for the compensation paid to them for revenue shortfall due to GST implementation. When a nationwide GST subsumed 17 central and state levies from July 1, 2017, it was decided that states will be compensated for any loss of revenue from the new tax for five years. That timeframe ended on June 30 this year.

FM further noted that Centre borrowed Rs 1.1 lakh crore in 2020-21 and Rs 1.59 lakh crore in 2021-22 as back-to-back loans to meet part of the shortfall in cess collection. She also said that the government of India has further released Rs 86,912 crore to states/UTs on May 31, 2022, and cleared the entire provisionally admissible GST compensation due till May 2022.

Besides, Sitharaman said that this decision was taken to assist the states in managing their resources and ensuring that their programmes especially the expenditure on capital is carried out successfully during the financial year.