The Hindu Business Line : Funding higher education

It is heartening to note that the Ministry of Human Resource Development has circulated a note for the establishment of a National Higher Education Finance Corporation (NHEFC) with a planned share capital of Rs 10,000 crore. This is a visionary step in the right direction. The government has pledged to raise public spending on education to 6 per cent of Gross Domestic Product (GDP). To accelerate public expenditure, the Union Budget 2004 introduced a cess of 2 per cent on major Central taxes/duties for elementary education, and Budget 2007 a cess of 1 per cent for secondary and higher education.

In the Eleventh Plan, the Centre envisages an outlay of about Rs 2.70 lakh crore for education which is 19.4 per cent of the total Plan spending. Around 50 per cent of Eleventh Plan outlay is for elementary education and literacy, 20 per cent for secondary education, and 30 per cent for higher education (including technical education). Even at such investment levels, Unesco puts India among the lowest spenders on education per student in the world.

The policy document envisages setting up 16 new central universities, with five engineering and medical colleges as part of them, 14 world-class central universities, including five medical and engineering colleges, besides other incentives and support. In the technical education front, the Eleventh Plan provides outlay for eight new IITs, 20 new NITs, 20 new IIITs, 7 new IIMs, and three new IISERs, besides other research and post-graduate fellowships.

Financing the expansion

The National Knowledge Commission (NKC) has recommended the creation of 1,500 universities in India by 2015 to support the growth of potential high-school pass-outs. The NKC has also made various recommendations in engineering, management, medical and vocational education, which also call for additional finance.

More than 70 per cent of higher education is offered by private participants. With the Human Resource Development Ministry’s plan of easing regulatory mechanisms, based on the Prof Yash Pal Committee recommendations, there will be a tremendous increase in the number of private educational institutions in various streams of education. This means that the requirement of funds for expansion of higher education will be around Rs 60,000 crore in 2009-10, going up to Rs 1,55,000 crore in 2016-17.

It is clear that the higher education system in India will see tremendous growth in both the public and private sectors and, hence, considerable pressures on allocation of finance. The NHEFC would be the ideal agency to arbitrate in the distribution of finance. In 1994, the Dr D. Swaminathan Committee looked into possibilities of resource mobilisation in technical education and recommended the establishment of an Educational Development Bank of India (EDBI) with an initial capital of Rs 3,000 crore. The Committee also said that “if and when educational cess is collected the proceeds should be fed into the EDBI, augmenting the resource availability.”

NHEFC to be inclusive

The educational cess was introduced in the Union Budget of 2005-06 and, till January 2009, the Government had collected Rs 23,889.83 crore. The cess collection is estimated to exceed Rs 30,000 crore at the end of this fiscal.

Had the Swaminathan Committee recommendations been implemented and this cess fed back to an EDBI, much of today’s financial crunch in the higher education sector could have been solved and definitely would have changed the face of Indian higher education. But better late than never. Union HRD Minister, Mr Kapil Sibal must ensure that the Swaminathan Committee recommendation, in its new avatar as NHEFC, is implemented. Institutions, both private and public, and students should have access to funds from NHEFC. The allocation of funds must be based on merit. Only such measures will fuel the growth of the higher education system and make it world-class.

(The author is Dean, Planning and Development, SASTRA University, Thanjavur. blfeedback@thehindu.co.in)