Last week, the Centre asked the States to use the borrowing window to make for the shortfall in GST compensation that the Centre owes them ordinarily.  Since COVID-19 and the lockdown have affected the revenues of the Centre, it is not in a position to pay the compensation, which is up to Rs 97,000 crore.  

The news is that Telangana Chief Minister K Chandrasekhar Rao on Tuesday has urged Prime Minister Narendra Modi to compensate the States keeping the situation in mind.  "In April 2020, we suffered a revenue loss of 83%. On the other hand, COVID-related expenditures increased.  States are made to depend on the Union Government to go for market borrowings," KCR said in the letter.

He added, "Prescribing a Fiscal Deficit of 3.5% for the Centre, whereas it is 3% for the States is against the spirit of the Constitution."  

KCR said that States are at the forefront of fighting COVID and reviving the stalled economic activities. "They need more resources than the Centre," the letter to the PM stated.

CM Sri KCR, in a letter addressed to PM Sri @NarendraModi ji, requested to reverse the Centre’s decision of asking the States to meet shortfall in GST compensation through borrowings and suggested that Centre should borrow on the strength of receipts into Cess amount. pic.twitter.com/UhU6xtC6lE

— Telangana CMO (@TelanganaCMO) September 1, 2020