It also pitched for a "skill university" and "entrepreneurial university" in every state.
The recommendations were made by Karnataka Higher Education Minister Basavaraja Rayareddi at the 65th meeting of the Central Advisory Board of Education (CABE) that concluded in the national capital today.
Karnataka Minister for Primary and Secondary Education Tanveer Sait was also present at the meeting.
One of the key recommendations made to the CABE was that it should enhance the existing budgetary allocation to higher education, Rayareddi said.
The government should also "provide opportunities for the universities to raise funds through a non-formal mode of education and service delivery", he said in a statement.
The government should ensure "increasing the financial independence of the universities by the development of a highly differentiated system of the rate of recovery through tuition fees, which does not burden the poorer sections of the society", Rayareddi said.
He also suggested to the government to explore the possibility of establishing the equivalent of not-for-profit companies in higher education to evolve new models of financial autonomy and innovative fundraising techniques through a greater integration of the community-oriented services and social entrepreneurship.
Stating that there should be no discrimination between the central and state-funded universities, Rayareddi said, "All benefits extended to the central universities must also be extended by the state governments to the state universities and the Centre must incentivise the states to do so."
Rayareddi also pointed out that the state recommendations made at the October, 2016 CABE meet were yet to implemented.
At that meeting, Karnataka had said the Centre should ensure that every girl child received 12 years of school education and that at least 50 per cent of them went to college and then, to the post-graduate level.
Among others, the state had recommended to the Centre to rationalise the process of appointment of vice-chancellors, the governing structure, performance monitoring and the mandatory pre-services training for teachers in higher education, the statement said.