The government is considering prepaying market loans to compensate states for the revenue loss due to the implementation of the Goods and Services Tax (GST). This move comes as a response to the states’ request for compensation amid the economic challenges posed by the COVID-19 pandemic.

The Centre is exploring various options to address the revenue shortfall faced by states, including the possibility of prepaying market loans. This step aims to provide financial relief to states grappling with the impact of the pandemic on their revenue streams.

By prepaying market loans, the government intends to ease the financial burden on states and ensure they receive the necessary funds to meet their expenditure requirements. The move is part of a broader strategy to support state governments in navigating the economic repercussions of the ongoing crisis.

The decision to prepay market loans is a proactive measure to assist states in managing their finances effectively. It underscores the government’s commitment to addressing the challenges faced by states in maintaining fiscal stability during these uncertain times.

Overall, the initiative to prepay market loans as a means of compensating states for GST revenue loss reflects the government’s efforts to prioritize the financial well-being of states and strengthen the cooperative federalism framework.