In a relief to cash-starved State governments of Andhra Pradesh and Telangana, the Centre on Thursday released Rs 2,155.25 crore to Telangana and Rs 1,543.43 crore to Andhra Pradesh to compensate them for the shortfall in GST revenue.

This is part of the total Rs 75,000 crore released by the Centre to the States and Union Territories on Thursday.

The GST Council in its meeting on May 28 had decided that the central government would borrow Rs 1.59 lakh crore and release it to the
states and UTs on a back-to-back basis to meet the resource gap due to the short release of compensation on account of inadequate amount in
the compensation fund.

The Chief Ministers and finance ministers of Telugu States have been repeatedly requesting the Centre to release GST compensation immediately as they are facing severe fund crunch due to Covid-induced financial crisis since March 2020.

This release is in addition to normal GST compensation being released every 2 months out of actual cess collection,” the union finance
ministry said in a statement.

It further said that all eligible states and UTs have agreed to the arrangements for the funding of the compensation shortfall under the
back-to-back loan facility.

“For effective response and management of COVID-19 pandemic and a step-up in capital expenditure, all States and UTs have a very
important role to play. For assisting the States/UTs in their endeavour, Ministry of Finance has front-loaded the release of
assistance under the back-to-back loan facility during FY 2021-22 Rs 75,000 crore (almost 50 per cent of the total shortfall for the entire
year) released today in a single instalment,” the ministry added. The balance amount will be released in the second half of 2021-22 in
steady instalments.