How to fix resource constraints in higher education

Why so? The University Grants Commission (UGC) claims that grants have increased several thousand times. For example, in 2020-21, it was 4,781 times the 1955-56 figure. Even as a ratio of GDP at factor cost, UGC funding increased from 0.02% in 1955-56 to 0.05% in 2020-21. However, it ignores growth in our higher education system. Universities have grown from 38 to 1,050, colleges from 1,025 to 40,000, and enrollment from 295,000 to 38.5 million. Grants could decline in real terms, bucking inflation and capacity addition.

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Higher education institutions increased by annual grant 10,527.3 crore in 2013-14 12,716.7 crore in 2020-21, a compound annual growth rate (CAGR) of 2.4%. Central universities fared slightly better, their grants increased 5,703.8 crore from 8,111.8 crore in the same period, a CAGR of 4.5%. Major central universities like Allahabad University (AU), Aligarh Muslim University (AMU), Banaras Hindu University (BHU), University of Hyderabad (HU), JMI and JNU are in a far better position. Grants to them grew at a much faster rate than the average of central universities over that period: JNU’s CAGR is 5.6%, BHU’s 7.2%, JMI’s 7.8%, HU’s 8.1%, AU’s 8.7% and AMU’s 10.7%. These six and the University of Delhi (DU) together account for about 57% of the grants released to the 45 central universities of India. Another 38 saw their grants stagnate or decline. Therefore, while the average grant per student to central universities remained 1.09 lakh, the above group received much more: 8.47 lakh for AMU, 8.20 lakh for HU, 8.08 lakh for JNU, 5.52 lakh for Jamia, 4.45 lakh for BHU and 2.63 lakh for DU. BHU receives additional grants for its IITs and AIIMS.

As not all grants are scarce, it is puzzling why most suffer from resource constraints. The likely culprit is a recent change in disbursement procedures that imposes conditions on universities no longer receiving grants in quarterly installments. Instead, they have to reclaim their rights through a Public Financial Management System (PFMS) month after month, but only if they meet specified conditions. It has taken away whatever little flexibility they had in using the resources according to their needs and preferences. In addition, the new process has also deprived them of the interest income they once earned through Treasury management.

The grant of salary can now be used only for transfers of sanctioned faculty and staff. Any savings on vacant posts cannot be used for other expenditure, not even for payment to contract guest, part time and visiting faculty. These and other expenses on repairs, maintenance, contingencies, consumables and educational travel are to be taken from the non-salary recurring grant. The amount sanctioned under it is usually less than the actual requirements.

The closure of India’s Five Year Plans has deprived universities of much needed development grants. Over the past eight years, their development grants have declined year-on-year: Jamia’s 28.3%, DU’s 26.4%, AMU’s 24.1%, JNU’s 19.1%, AU’s 17.3% and HU’s 11.6%. Since 2017, development grants have been replaced by Loans for Revitalizing Infrastructure and Systems in Education (RISE) by the Higher Education Funding Agency (HEFA). So far, loan value 19,963.9 crore has been sanctioned under HEFA/RISE. The biggest borrowers have been Indian Institutes of Technology ( 12,345.2 crore) and National Institute of Technology ( 2,951.1 crore). In comparison, 26 out of 45 central universities have borrowed total 4,142.6 crores. The rest got nothing for development.

During the 11th and 12th Five Year Plans (which lasted till 2016-17), the Central Universities respectively received 7,829.5 crore and 9,346.3 crores. No wonder they are now suffering from lack of resources and are collapsing. There is no benefit to the government. It bears the interest cost and repayment burden on HEFA/RISE loans. Furthermore, expensive education students have no option but to take out student loans, many of which are increasingly non-performing.

It is time to recall the proven wisdom that the grant-in-aid system is the cheapest form of public funding for higher education. Other methods are not only cumbersome but also more expensive for the exchequer.

These are the personal views of the author.

Furqan Qamar is a former Advisor on Education in the Planning Commission and is currently Professor of Management at Jamia Millia Islamia, New Delhi.

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