The government on Thursday said it has accepted recommendations of the 13th Finance Commission, which called for greater share of states in central tax proceeds, despite strains on its finances.
"Government of India, despite the strains, has accepted recommendations of the Finance Commission," Finance Minister Pranab Mukherjee told reporters here.
The Commission in its report, tabled in Parliament, recommended increase in share of states to 32 per cent of central tax proceeds from the current 30.5 per cent.
Mukherjee said Rs 3.19 lakh crore will be additional grant payment to states during the five-year period 2010-11 to 2014-15.
Besides, the Commission, headed by former finance secretary Vijay Kelkar, also recommended that states and local bodies be given shares in central tax proceeds, the burden of which will be Rs 87,000 crore, he said.
The Commission also prescribed some other grants for elementary education, state-specific needs etc, besides Rs 30,000-50,000 crore as part of compensation to states for proposed GST roll out.
The government finances are under pressure with fiscal deficit of the Centre rising to 6.2 per cent of the GDP during 2008-09 after stimulus measures were announced in the wake of global economic crisis.
For 2009-10, the fiscal deficit is projected at 6.8 per cent of GDP.