In its 15-page supplementary report tabled in Parliament on Wednesday, the commission has also recommended setting up of an incentive fund of Rs 10,607 crore, which is the revenue deficit grant orginally meant for 15 states during 2000-05 and a matching contribution from the Centre.

The supplementary report was submitted to the President in August. The additional terms of reference was given after several states criticised the devolution package in the main report which, they said, was discriminatory to performing states.

In the main and final report, the Finance Commission had recommended that central fiscal transfer to the states should be around 37.5 per cent of the divisible central pool taxes and the contributions to the incentive from the Centre should be accommodated within this level.

The main report was submitted in early July, which was subsequently tabled in the monsoon session of Parliament.

The 15-page supplementary report, howver, has a dissenting note by one of its members Dr A Bagchi, who did not agree with the recommendations for creation of the incentive fund.

Accepting the recommendations of the supplementary report, Finance Minister Yashwant Sinha said it had been done in the interest of furthering the cause of fiscal reforms in the states.

(PTI)