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Bihar plans to inspect its universities and colleges to assess their academic, administrative and financial health. The accumulated deficit of Madras University has exceeded 100 crore as of 2021-22. Universities in Kerala are facing financial distress due to disruptions in grant allocations. Public-funded higher educational institutions seem to be in a crisis situation due to chronic underinvestment. Central universities and other centrally-funded institutions of higher education were thought to be better funded, but it is not true anymore. The Delhi University Teachers Association has been distressed about the financial condition of several colleges. University of Allahabad must raise fees to ease financial troubles, but faces the ire of students. Jawaharlal Nehru University (JNU) has been unable to undertake repairs and maintenance due to a paucity of funds. Jamia Millia Islamia (JMI) has been struggling to reimburse medical bills, pay the pending dues of its pensioners and meet the expenses of centres that have been running in project mode.These are but a few examples. Financial distress pervades most central universities.

Why so? The University Grants Commission (UGC) claims that grants have increased by many thousand folds. In 2020-21, for example, it was 4,781 times the figure of 1955-56. Even as a proportion of GDP at factor cost, UGC funding went up from 0.02% in 1955-56 to 0.05% in 2020-21. However, this ignores the growth in our higher education system. Universities have surged from 38 to 1,050, colleges from 1,025 to 40,000, and enrolment from 295,000 to 38.5 million. Discounting inflation and capacity growth, grants may have declined in real terms.

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Annual grants to higher education institutions rose from 10,527.3 crore in 2013-14 to 12,716.7 crore in 2020-21, a compound annual growth rate (CAGR) of 2.4%. Central universities have fared a little better, with their grants having risen from 5,703.8 crore to 8,111.8 crore, a CAGR of 4.5%, over the same period. Prominent central universities like University of Allahabad (AU), Aligarh Muslim University (AMU), Benaras Hindu University (BHU), University of Hyderabad (HU), JMI and JNU, are far better placed. Grants to them over that period grew at a much faster rate than the average of the central universities: JNU’s CAGR works out to 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 Delhi University (DU) taken together get about 57% of grants released to India’s 45 central universities. The other 38 saw their grants stagnate or decline. So, while the per-student grant to central universities averaged 1.09 lakh, the above group received far more: 8.47 lakh for AMU, 8.20 lakh for HU, 8.08 lakh for JNU, 5.52 lakh for JMI, 4.45 lakh for BHU and 2.63 lakh for DU. BHU receives additional grants for its IIT and AIIMs.

As not all grants are low, it is puzzling why most are suffering from resource scarcity. The likely culprit is a recent change in disbursement procedures that impose conditionalities on universities, which no longer receive grants in quarterly instalments. Instead, they have to reclaim their entitlements through a Public Financial Management System (PFMS) month by month, but only if they meet the specified conditions. This has taken away whatever little flexibility they had in using resources according to their needs and priorities. Further, the new process has also deprived them of the interest income they once made through treasury management.

Grants for salaries can now be used only for transfers to sanctioned faculty and staff. Any savings on unfilled positions cannot be used for other expenditure, not even for payments to contractual guest, part-time and visiting faculty. These, and other expenses on repairs, maintenance, contingencies, consumables and academic travel are to be taken from non-salary recurring grants. The amounts sanctioned under this are usually less than actual requirements.

The discontinuation of India’s five-year plans has deprived universities of much-needed development grants. Over the past eight years, their development grants have gone down year-on-year: JMI’s by 28.3%, DU’s by 26.4%, AMU’s by 24.1%, JNU’s by 19.1%, AU’s by 17.3% and HU’s by 11.6%. Since 2017, development grants stand replaced by Higher Education Funding Agency (HEFA) loans for Revitalising Infrastructure and System in Education (RISE). So far, loans worth 19,963.9 crore have been sanctioned under HEFA/RISE. The biggest borrowers have been the Indian Institutes of Technology ( 12,345.2 crore) and National Institutes of Technology ( 2,951.1 crore). In comparison, 26 of the 45 central universities borrowed a total of 4,142.6 crore. The rest of them received nothing for development.

During the 11th and 12th five-year plans (that ran till 2016-17), central universities respectively received 7,829.5 crore and 9,346.3 crore. No wonder they now reeling under a resource crunch and are crumbling. The government has been no gainer. It ends up bearing the interest cost and repayment burden on HEFA/RISE loans. Besides, expensive education leaves students with no option but to take student loans, many of which are fast turning non-performing.

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

These are the author’s personal views.

Furqan Qamar is a former adviser for education in the Planning Commission and currently professor of management at Jamia Millia Islamia, New Delhi. 

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