The first national policy on education was formulated in 1968, eighteen years after development planning in newly independent India was launched. Exactly eighteen years later, came the second and the current national policy on education in 1986, which was modified and adopted again in 1992. During the last few years, the need for another national policy on education is being increasingly felt, given the significantly changing landscape in all spheres of development in general and education sector in particular.
During the last two decades, in the absence of any new policy, changes in education sector were introduced with executive orders and uncoordinated initiatives. The new government immediately after coming to power has indicated that it would come with a new National Policy on Education. In this overall context, with special focus on higher education and further on financing higher education, a few policy issues need to be carefully examined. After all, it is widely acknowledged that finances not only have an important role, but are also clearly indicative of the government’s priority in favour of a given sector.
The importance of higher education funding
Higher education is widely acknowledged as an important public good, and a social responsibility. Because of its direct relationship with development, and more importantly because of the externalities it produces, state funding of higher education assumes critical importance. It is necessary that the state makes a firm commitment to liberal funding of higher education. It has been repeatedly reiterated that we spend at least six per cent of GDP on education and 1.5 per cent especially on higher education. While there is need to revisit these targets, these may be viewed as minimum targets for the immediate future. These resources need to flow out of general and specific tax (e.g., education cess) and non-tax revenues of the government at central and state levels.
There should be a proper sharing of responsibilities in funding higher education in India between the union (central) and state governments. While the central government directly or indirectly through the University Grants Commission (UGC) entirely funds the central universities, only the development expenditure of state universities and colleges is funded by the union government. Recent commissions/committees (e.g., National Knowledge Commission, Yashpal Committee) have suggested that the union government may fund state universities and colleges as well, beyond the development expenditure.
Goals to keep in mind when financing higher education
Higher education sector needs to be adequately funded keeping in view the goals relating to expansion (quantitative targets), improvement in access to higher education of the weaker sections, and improvement in quality to acceptable level (in all institutions), and excellence in a large number of selected institutions. Before expanding the higher education system further with new universities and colleges, it is necessary to ensure that the existing institutions are reasonably well-developed and are put on a sound financial base. Like the ‘operation blackboard programme’, it may be required to launch similar programmes to ensure investment in basic infrastructure facilities at all institutions of higher education. To promote quality and excellence, substantial resources need to be allocated to promote research in all universities and other institutions of higher education. Reasonable proportions of the budgetary allocations to higher education need to be committed to research and also to scholarships to promote equity and merit. Flow of funds to the higher education institutions need to respond to the varying needs of various institutions on the one hand, and the performance of the institutions on the other.
Should public funds go to private institutions?
A related issue that one has to examine is: whether it is justified to allocate public funds to private universities and colleges, which are defined otherwise as ‘self-financing’ and are treating education as a ‘business,’ as the Yashpal Committee observed. The issue becomes particularly important as state resources are not enough to adequately finance even the public institutions of higher education. So financing of private institutions may mean ‘public pauperization and private enrichment.’
Need to cap student fee as a part of the funds required by an institute
Since higher education produces a wide set of social benefits to the whole society, there is no justification to expect the higher education institutions to significantly rely upon student fees. Earlier committees constituted by the UGC and the All-India Council for Technical Education (AICTE) have suggested that these institutions be allowed to generate about 20 per cent of their budget requirements through student fee and other sources. A Committee of the Central Advisory Board for Education (2005) suggested that this 20 per cent may be seen as an upper limit so that equity considerations of higher education are not traded off.
Similarly, while student loans are becoming increasingly popular, these cannot be seen as a reliable method of financing higher education on a large scale. The adverse effects of student loans on students’ attitudes and approach towards higher education and the values that these loans impart, besides its accentuating role in commercialization of higher education, need to be carefully examined before further expanding loan programmes.
Liberal funding by the state and by the society a must for a strong higher education system
Strong higher education systems are developed in advanced regions of the world with the liberal funding by the state and equally liberal funding by the society at large, specifically through donations and endowments from the corporate sector and individuals, including the alumni. Student contributions in terms of fees constitute a relatively minor source of funds. It is necessary to develop a framework in India that promotes this missing source of funds – the non-state and non-student sector. Besides, linking some of the provisions of the Corporate Social Responsibility Act specifically to higher education sector, innovative measures to promote individual and corporate donations and endowments to higher education need to be searched for. A proper system of matching grants to higher education institutions needs to be put in place.
Lastly, at least a 10-20 year plan for funding of higher education that corresponds to a long term perspective plan of higher education development in the country needs to be developed, based on sound principles of financing of higher education. Such a plan should assure the higher education institutions a steady flow of funds for a 10-20 year period, with sufficient provisions for rewards and for punitive action. This might also require that every institution prepares a sound feasible long term plan for development.
Jandhyala B G Tilak
National University of Educational Planning and Administration, New Delhi 110016
(Disclaimer: The thoughts expressed in this column are the author's own.)