04 Feb 2020 16:56 IST

Higher education in India needs a big funding boost

Regulatory mechanisms too require a major overhaul if the quality of higher learning is to improve

Finance Minister Nirmala Sitharaman has allocated ₹39,466.5 crore towards higher education, a 3 per cent increase from 2019-20. However, this is unlikely to address the concerns in the sector considering the large number of youths joining institutes of higher education every year, with over eight lakh such entrants in 2018-19 alone. Further, the employability of those graduating from such institutions raises serious concerns.

About 80 per cent of engineering graduates are unfit for jobs in the knowledge economy, with barely 2.5 per cent of them possessing skills in artificial intelligence (AI) that the industry increasingly requires, points out the Aspiring Minds Report 2019. These statistics, while showcasing the dismal state of higher education, show there’s much scope for improvement.

Today with 51,649 colleges, India has the largest advanced education system in the world. However, government expenditure in this area continues to fall short of the increasing demand. As per a Brookings India report, the expenditure of the Centre on higher education has seen a five-fold increase between 1980-1981 and 2010-2011. However, the annual growth rate of enrolment has increased 10 times in the same period. This trend continued in 2001-2011, where the increase in annual college enrolment was twice the government expenditure, which increased at 10.9 per cent per year. Even in terms of spending form the allocated funds, revenue expenditure continues to hugely outweigh capital expenditure, with as much as 94.4 per cent allocated to revenue in this Union Budget.

Autonomy and spending

The challenge is not merely in the volume of government expenditure in the sector, but the way in which these funds are administered. Education, being a concurrent subject, is governed by both the Centre and the States. While the University Grants Commission (UGC), along with the National Assessment and Accreditation Council (NAAC) and the National Board of Accreditation (NBA). are in the business of monitoring quality, leaving little autonomy for States, this relationship flips when it comes to funding.

Since 2008-09, States’ spending has constituted about 60-65 per cent of the expenditure on higher education, as much of the Central funding is restricted to a few central universities. Central grants are usually directed at specific projects, thus enhancing the quality of research. State funds, on the other hand, were largely maintenance funds, focused on operational expenditure of higher education institutes. Thus, most of the State-governed institutes were left with limited financial resources for their operational needs. The Union Budget 2020-21 too has allocated a paltry 0.7 per cent of the higher education budget to States through the Rashtriya Uchchatar Shiksha Abhiyaan.

The lack of sufficient funds from the Centre, coupled with the limited financial capacity of States, leaves a large funding gap that has led to a large number of affiliated colleges. The model involves an affiliating university regulating the setting up and functioning of a network of colleges for a fee. This fee is one of the prime sources of revenue for the underfunded State universities and requires minimal government investment. However, with universities having as many as 100 affiliated colleges in some cases, they have been unable to monitor and maintain the infrastructure and teaching standards in these affiliated colleges.

The mandatory assessments

On the governance front, the UGC frames the rules and regulations but has no authority to implement them. While the UGC is also responsible for monitoring the quality of higher education institutions through inspections, it lacks any power to penalise them as the power to de-recognise errant institutions lies with the affiliated universities.

The difficulties of the UGC keeping up with the exponential growth of private universities has led to increased reliance on two accreditation bodies — NAAC and NBA — whose accreditations are now mandatory for UGC funding. The challenge with mandatory assessments is that the two bodies do not have enough capacity which is reflected in a mere 14 per cent of institutes across India having a valid NAAC certification.

Considering these challenges, it is quite clear that the regulatory mechanisms and funding processes require a major overhaul if the quality of higher education is to improve. The two existing professional boards must be sufficiently funded to increase capacity and help them carry out effective quality controls. Considering the high reliance on the affiliated model of higher education, clustering affiliated colleges can be a novel way to improve resource utilisation between the networks of colleges while also ensuring ease of monitoring for the affiliated universities.

Given the shortage of government funding, new sources, such as CSR, for research projects, and tax exemptions for donations to higher education centres can be explored. Such initiatives will go a long way in improving the higher education system that can potentially help India produce a workforce with the right skills for a knowledge-based economy.

(The writer is a student at the Indian School of Business.)

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