Telangana Finance Minister Etela Rajender on Saturday urged the Centre to release more Rs 100 and Rs 500 notes, as the state was witnessing a severe shortage of cash in these denominations.

"The Centre should release more funds to the states that are facing problems due to the demonetisation of big notes and subsequent decrease of revenue of states. Though the cancellation of big notes was good, the Centre should ensure that there is no problem to the poor and the people belonging to low income group and middle class," the Finance Minister was quoted as saying.

Etela was speaking at the GST Council meeting in New Delhi on Saturday.

According to reports, besides requesting the Centre to release funds for the development of backward districts, he demanded an immediate increase in the supply of currency, with a special focus on rural areas.

Last month, following the demonetisation of Rs 500 and Rs 1,000 notes, the state said that its revenues were likely to come down by nearly Rs 3,000 crore during the current financial year.

The Chief Secretary and some top officials met a central team that visited the state to study the impact of demonetisation, and submitted a detailed report on the issue.

The Chief Secretary had said that the new note of Rs 2,000 was of little help due to severe shortage of small currency notes.

He wanted the central team to ensure that state was immediately supplied Rs 500 notes.

Chief Minister K Chandrasekhar Rao also reiterated that if the current trend continued, the state may even suffer a revenue loss of upto Rs 7,500 crore during the current financial year.

Ever since demonetisation was announced, both the Telugu states have been faced with a severe cash crunch.

On Friday, Telangana's neighbour Andhra Pradesh received an amount of Rs 2,420 crore from the RBI to tackle the situation.