The problem of higher education funding – Fxsad

The problem of higher education funding

By Furqan Qamar

Government funded higher education institutions in India have served the country well. For the underprivileged in the country to have a chance of higher education, a healthy ecosystem of government-sponsored institutions must be maintained. Given the importance of this, it should be of great concern that the state and state-supported colleges and universities are in dire financial straits.

Public universities and their colleges have been in trouble for some time. The problem has now spread to central universities. Most of the financial situation is dangerous.

A glance at the income and expenditure accounts shows that expenditure consistently exceeds income for many central universities, including the prestigious ones.

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Such defects are running into hundreds of crores of rupees. In some selected central universities, the average annual deficit from 2013-14 to 2020-21 has reached Rs.64.64 crore to 421.35 crore as a percentage of total expenditure, their deficit is between ~20-33%.

The official explanation is that these are not financial shortfalls and are caused by previous expenses and depreciation and pension benefits. It is explained that they do not pose any payment problem to universities as they are non-monetary or ideological.

A little familiarity with accounting practices and procedures, however, suggests that long-term operational deficiencies can negatively impact the survival and sustainability of firms.

The revenue shortfalls are transferred to the capital accounts and continue to eat into the corpus or add to the liabilities, which must be paid earlier. Even if they don’t pose an immediate threat, they add to the delays and risks in the long run.

The situation is caused by low investment in higher education. For the past eight years, the student per student support for central universities, for example, has recorded a compound annual growth rate (CAGR) of 2.58%. Aid to central universities has been reduced due to inflation.

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The situation has worsened due to the termination of the development assistance given to these universities when they had less than five years of planning.

Such grants are not available for central universities. Instead, they have to get loans from the Higher Education Funding Agency (HEFA) for the Renewal of Infrastructure and Education Systems (RISE). Although the government bears the burden of interest and up to 90% of the principal, the borrowing university is required to repay 10% of the principal over a period of 10 years. This results in a payment obligation in their annual expenses.

Wary of defaulting on their repayment obligations, only 26 of the 48 central universities received HEFA loans totaling Rs 4,142 crore – an average of Rs 159.3 crore per university. The rest may have given up on infrastructure and equipment upgrades. On the contrary, in the 11th and 12th five-year plans, all central universities received Rs 7,829.53 crore and Rs 9,346.29 crore respectively. No wonder central universities are under resource crunch and collapsing both internally and externally. Many could not add new infrastructure. Most of them could not even maintain their existing buildings and physical infrastructure. Some are struggling to meet their expenses.

As a result, central universities have been under great pressure to mobilize resources on their own. They will need to raise user fees and increase cost recovery to become self-sustaining soon.

However, they remain largely dependent on public accounting. In six of the eight selected universities, grants-in-aid accounted for 91-95 percent of revenue.

The tuition fee of a student in these universities ranges from Rs 6,971 to Rs 38,754 per annum. The cost per student varies from Rs 3.31 lakh to Rs 11.59 lakh per year.

Universities have been very reluctant to raise resources on their own, not without reason. Increasing fees goes against their mission of providing quality higher education at an affordable price. They see higher education as a public responsibility and insist that the government foot the bill. Some do not want to increase fees for fear of campus instability. In addition, there is a built-in incentive to generate internal revenue, with subsidies reduced proportionally for every penny they generate.

In addition, income tax exemption requires universities to be fully or adequately funded by the government. In addition, they should not engage in any economic activity that is considered non-academic.

It is time for the nation to move toward formal funding for higher education. So far, both the government and regulatory bodies have avoided this. Even the new national education policy has bypassed this crucial issue. It shouldn’t be rocket science for newly established small-scale universities to do what every student can claim as a right. The added percentage may be to encourage universities for their performance in terms of equity, quality and excellence.

The public should understand how important the government’s higher education system is to provide quality higher education at an affordable price to the poor.

The author is a professor, Jamia Millia Islamia and former Education Advisor, former Planning Commission.
Views are private.


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