Financing of higher education in India: issues and prospects

Abstract

In India, there has been a phenomenal increase in enrolment in collegesand universities over the last several decades. In fact, the number ofuniversities have taken a quantum jump from 28 in 1950-51 to 245 in 2002,including 17 Central universities and 47 deemed universities, colleges from695 to 12,342 including 176 State universities during this period. The studentpopulation increased from 2.5 lakhs to over 75 lakhs while the number ofteachers increased from 12,000 to 3.95 lakhs. It is however interesting to notethat while India has the second largest system of higher education, next onlyto the U.S., the total number of students hardly represent 6 per cent of therelevant age group aged between 18 and 23 years, which is much below theaverage of developed countries (47 per cent) and less than that of developingcountries which is 7 per cent.Not only are the challenges and constraints severe with respect to themanagement of Higher education institutions, but a major part of the problemis the inadequate provision of budgetary resources to face these challenges."Since budget resources are limited, and such resources as are available, needto be allocated to expanding primary education, it is important that theuniversities must make greater efforts to supplement resources from thegovernment" (Draft Approach Paper to the Tenth Five Year Plan ). Bulk ofthe funds received by both Central and State universities are from publicsources. Private contribution to education in the form of donations andendowments, which were the hallmarks of the pre-Independence period, hasdwindled. The internal resources of universities have been dwindling as apercentage of their annual maintenance expenditure. Investment in highereducation is far too inadequate. Cost recovery from students has not keptpace with the requirements. Most of the expenditure is on salaries, especiallyon the non-teaching staff, which in some universities number five times theteaching staff. Salaries and perquisites have grown precipitously with nocorresponding reduction in numbers.Faced with financial crises coupled with competing demands for fundsfor different sectors of the economy, the State and Central Governments havenot been able to allocate adequate resources for higher education. One is farbehind the target of spending 6 per cent of the GDP on education asrecommended by the Kothari Education Commission (1964-66), and in therecent years the relative share of higher education in the allocation of fundshas also declined, primarily due to resource constraints. Although, the overallgovernment contribution has been increasing throughout the plan periods, ithas not kept pace with the rapid rise in enrolment and escalation in prices.Often inadequacy of financial resources leads to poor infrastructure andphysical facilities, low investment in research and development, having anadverse impact on the quality of the higher education system . This studyintends to articulate a rationale for diversifying funding in Higher educationand to redefine the role of the government in this sector .