The ministry said that including the ₹1.59 trillion released to states under a back-to-back loan arrangement, a total of ₹2.78 trillion has been released to states for FY21 and that nothing was pending for that year. 

Currently, only for the just concluded year FY22, compensation of ₹78,704 crore is pending due to inadequate balance in the GST compensation fund, which is equivalent to compensation of four months, the ministry said.

"Normally, compensation for ten months of April-January of any financial year is released during that year and the compensation of February-March is released only in the next financial year… Compensation of eight out of ten months of 2021-22 has already been released to states. The pending amount will also be released as and when amount from cess accrues in the compensation fund," the ministry said in a statement.

At the time of introduction of GST, Constitution amendment provided that the Parliament, by law shall provide compensation to states for a period of five years for loss of revenue due to introduction of GST. Accordingly, the GST Compensation to States Act was legislated which provides for release of compensation against 14% year-on-year growth over revenues in 2015-16 from taxes subsumed in GST. 

Compensation of about ₹49,000 crore was released for FY18 from the GST compensation fund, which increased to ₹83,000 crore for FY19 and further to ₹1.65 trillion in 2019-20. For these three years, almost ₹three trillion compensation was released to states, the ministry said. 

However, the compensation requirement increased substantially during FY21 due to the impact of covid on revenues and to ensure that states have adequate and timely resources to combat covid and related issues, Centre borrowed ₹1.1 trillion in FY21 and ₹1.59 trillion in FY22 and passed it on to states on a back-to-back basis, the ministry said.