Higher education needs relief from its resource crunch

Source: The post is based on an article “Higher education needs relief from its resource crunch” published in Live Mint on 4^th November 2022.

Syllabus: GS 2 – Education

News: Public Universities (State/Central) in India are facing the problem of underinvestment and they even lack funds to fulfil their basic needs.

Jawaharlal Nehru University (JNU) has been unable to undertake repairs and maintenance due to the lack of funds. This lack of funds has raised concerns on the funding of UGC.

What is the stand of University Grants Commission (UGC) on current finance problems of public universities?

As per the UGC, the grants given to the Universities have increased from the past years.

For example, the grants given in the year 2020-21 was 4,781 times of 1955-56. UGC funding went up from 0.02% in 1955-56 to 0.05% in 2020-21 as a proportion of GDP at factor cost.

However, these funds are not enough to fulfil the demands of universities as universities/colleges have also increased with the time along with higher enrolment.

Therefore, even though grants seems more but in real terms they have declined.

How has the grants given to universities changed?

Annual grants to higher education institutions rose from ₹10,527.3 crore in 2013-14 to ₹12,716.7 crore in 2020-21 which is a compound annual growth rate (CAGR) of 2.4%.

Prominent central universities are at better place compared to others as their CAGR have increased more than other central universities.

For example, JNU’s CAGR is at 5.6% BHU’s 7.2%, JMI’s 7.8%, AU’s 8.7% and AMU’s 10.7%.

Therefore, from the above data it is evident that the grants have increased for almost all universities but the problems face by universities still persists.

Why universities face problems even with the increase in grants?

Universities earlier used to receive grants in quarterly instalments but there has been change in the disbursement procedures of grants.

Presently, Universities have to reclaim their grants through a Public Financial Management System (PFMS) month by month.

These grants are given to universities only if they meet the specified conditions (on the basis of conditionality) and this has also deprived universities to earn the interest income on the saved grants.

Moreover, if grants given particular purpose remain unutilized, it cannot be utilized for another purpose.

For example, grants for salaries can only be used to give salary to the designated faculty and it cannot be used for other expenditures like payments to contractual guest, part-time and visiting faculty, etc.

Further, grants required for expenditures such as repairs, maintenance have to be taken from non-salary recurring grants. The grants given under this are usually low than the actual requirements.

Therefore, with the introduction of new procedure for disbursement, universities face problems and their conditions were better during the five-year plans.

How were five-year plans beneficial for universities?

The five-year plans provided universities with development grant.

The discontinuation of five-year plans replaced the development grants by Higher Education Funding Agency (HEFA) loans for Revitalizing Infrastructure and System in Education (RISE).

During the 11th and 12th five-year plans, central universities received ₹7,829.5 crore and ₹9,346.3 crore but the current HEFA/RISE loans act as a burden for the universities as they have to repay them with the interest.

Moreover, the financial problem makes universities to raise fees which acts a burden on the students and they are forced to look for loans which mostly ends up with NPAs.

Therefore, there is a need to come up with better funding options for universities as other methods are complex and are more costly to the public exchequer.