Union Finance Minister Nirmala Sitharaman on Saturday said Centre could not pay pending compensation to states under the Goods and Services Tax regime because the collection was not adequate. However, she assured that the government’s compact with the states will be honoured.

Her comments came days after seven Opposition-ruled states and Union Territories urged that funds due for four months since August be released as soon as possible. Punjab, Delhi, Puducherry, Kerala, Madhya Pradesh, Rajasthan and Chhattisgarh pointed out that as much as Rs 50,000 crore was lying “unutilised” in the compensation fund even as the states wait for their money. Kerala had even warned of approaching the Supreme Court over the matter.

The GST Council went about reducing the tax rate of certain set of commodities, Sitharaman said while addressing the inaugural event of the Hindustan Times Leadership Summit in New Delhi. “And I am not blaming anyone here,” she said. “Equally all of us went about in every meeting of the GST Council to reduce the taxation rate of certain set of commodities. At the end of the day, the intentions were good [but the tax rates] kept reducing, kept reducing.”

The finance minister added that reduction per se is not bad. “[But] In enthusiasm to reduce more taxes, credit became minuscule and the framework originally agreed upon on phase one of GST got distorted...I can only give a confidence that we shall have a streamlined GST and address the issue for the assessee”.

Sitharaman said the government is working on more measures to boost investments and bolster growth. “Tax rate cut is one among the many things we are thinking to boost growth,” she said. “Fiscal discipline is a law. I have to obey the act. I have to go by the glidepath given to me from 2014 if not 2004. The learned economists are telling us that we have to pause the fiscal discipline and move towards more fiscal stimulus.”

Figures released recently showed that Gross Domestic Product growth slumped to a six-year low in October to 4.5%. The Reserve Bank of India on Thursday had sharply reduced its economic growth forecast to 5% for 2019-’20 financial year, just two months after it had forecast a 6.1% growth rate. However, the central bank kept its key lending rate unchanged at 5.15%.

The finance minister said the public sector banks have disbursed nearly Rs 5 lakh crore in the last two months to boost consumption in the rural areas. “We are adopting a direct method and also the method through which we are spending on infrastructure, whose spillover can go to core industries labour and so on,” she said.

The Centre had in September reduced the corporate tax rate for companies that do not avail of any other incentive from 35% to 22% to boost the economy.

The Union minister said she would like to hear from others on proposals to boost consumer confidence. “I ask that question all the time,” she said. “I do not want to think what I have done is enough. I want to know it from others. That question cannot be alone addressed by me.”

Sitharaman said she was working on a simplified tax regime. “We are moving towards a more simplified and harassment-free taxation regime,” she said, adding that she has appealed to the revenue secretary’s office to make sure all problems were addressed.