CPRHE POLICY BRIEF_ Final 4-5.CDR

National Institute of Educational Planning and Administration

17-B, Sri Aurobindo Marg, New Delhi - 110016 (INDIA)

website: www.niepa.ac.in

Centre for Policy Research in Higher Education

Financing of Higher Education

Policy Brief 4

Changing Dynamics of Resource Allocation to

Higher Education Institutions in India

Policy Brief 5

Resource Mobilisation Strategies by

Higher Education Institutions in India

2023

POLICY BRIEFS

(Deemed to be University)

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National Institute of Educational Planning and Administration

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Policy brief are based on the issues emerging from the empirical studies carried out by the

Centre for Policy Research in Higher Education (CPRHE), NIEPA, New Delhi. These policy

briefs are addressed to the policy makers and higher education managers.

Disclaimer: The views in the publication are those of the author and do not necessarily

reflect those of the National Institute of Educational Planning and Administration,

New Delhi.

First Published – January 2023 (5 H)

Introduction

The competing demand for public funds under the regime

of neo-liberalism has compelled the public exchequer to

reprioritise the public expenditure with an emphasis on

social sectors such as health and education. And within

education sector, the school education has received

greater priority for allocation of limited public resources to

fulfil the EFA goals and because of its significance for

higher social returns. However, India has become one of

the fastest expanding higher education sectors and

second largest higher education system in the world with

the growing social demand for higher education.

This expansion of the higher education sector is driven by

the expansion of private higher education institutions and

enrolments therein. The public financing of higher

education sector has not been commensurate with its

massive expansion. While overall education got a share of

4.39 per cent to total GDP of the country in 2019-20, the

share of technical education is 0.95 per cent and that of

university and higher education is 0.52 per cent (MoE,

2022).

Within higher education, there is an imbalance in resource

allocation between the centre and the states. While a

larger share (more than 90 per cent approx.) of the central

government's resources for higher education is absorbed

by the central level higher education institutions,

particularly technical institutions, the state level higher

education institutions catering to more than 90 per cent of

enrolments in the country starve for funds as the focus of

resource allocation at states is for school education. The

resource allocated to the public higher education

institutions at state level has thus remained inadequate

over the years with the rapid expansion in enrolments in

state level HEIs. The contribution by the welfare

departments in states like Andhra Pradesh, Telangana,

Tamil Nadu, etc., towards increasing demand for

technical courses (offered by private sector) for backward

classes through Fee Reimbursement Schemes (FRS)

has raised the financial burden of the state exchequer

in allocating funds for public higher education

institutions (Reddy & Reddy, 2019). With such inadequate

government funding, the institutions focus on

reprioritisation of their expenses under recurring or

salary head or project head and non-recurring or

developmental head. They resort to resource mobilisation

strategies as well to recover the gap in resource

requirements by undertaking measures such as cost-

saving or cost-cutting measures, cost sharing measures

and income generating activities. This policy brief

underpins the changing dynamics of resource allocation

to public higher education institutions in India and

intervention strategies for a targeted approach for

resource allocation to those institutions facing extreme

challenges in order to meet the growing financial

requirements for the functioning of the institution.

Resource Allocation: Criteria and Process

Allocation of fund at different levels of higher education

such as centre, state and institution levels do not follow any

specific criteria. Budgetary allocation is made under three

heads: (a) salary head which includes salary of permanent

teaching and non-teaching staff, (b) non-salary or project

head which includes pensions, equipment, repair and

maintenance and salaries of the contractual or temporary

teaching and non-teaching staffs and (c) capital head

where minor fund allocation is made for purchase of books

and journals, e-resources, campus development, labs and

small equipment etc.

Changing Dynamics of Resource Allocation to

Higher Education Institutions in India

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POLICY BRIEF 4

2023

Centre - State Allocation of Resources

The available fiscal resources as well as inter-sectoral

competing demands for public funds basically determine

expansion of public higher education sector.

The central level higher education institutions receive

direct grants from the University Grants Commission (UGC)

or the Ministry of Education for their recurring expenses

(under salary and non-salary heads) and non-recurring

expenses (under the head called capital assets, that

includes funding for books, journals and e-resources, labs,

purchase of small equipment, campus development,

etc.). Major development funding for infrastructure or

building (e.g. new infrastructure, R&D facilities or

renovating existing infrastructure, other capital

expenditure) by the central level institutions is done

through HEFA loan though with limited coverage and

outcomes for diverse higher education institutions. State

level universities and colleges under Section 12 (b) and 2 (f)

of the UGC Act received limited funding from UGC

(research & development grants only) till the end of the 12

plan period. Other funding agencies such as AICTE, MCI,

BCI, INC, CoA, ICAR, DST, DBT, DRDO etc., funding for

technical and professional courses, allocate funds

keeping into consideration the relevance of research and

innovation and quality of the institution. Barring the central

level HEIs, these are not fulfilled by many state level higher

education institutions. Hence, such institutions are unable

to receive funding from many funding bodies. There is even

an imbalance in fund allocation by multiple funding

agencies as some elite institutions receive funds from

multiple funding agencies for the same research &

innovation activities while other institutions end up with

limited or no funds.

The central government funding, linked with academic,

administrative and financial reforms of the state higher

education for focussed and targeted funding of state HEIs

(shared between the centre and states) for development

purposes under Rashtriya Ucchatar Siksha Abhiyan (RUSA)

is channelised through the state higher education

departments and state higher education councils (SHECs),

wherever they are fully functional. The impact of RUSA

funding is limited to selective state HEIs those are

accredited with NAAC and fulfilling other well-defined

norms and parameters. The amount of funding keeps

varying according to the NAAC scores. Allocation is a line-

item based process and funds are allocated under three

heads with specific shares such as; for new construction

(50 per cent), for upgradation of existing infrastructure

(40 per cent) and for purchase of new instruments and

equipment (10 per cent). Funds are released on instalment

basis. The next instalment is released only when 75 per cent

of the previous instalment amount is utilised.

Overall, there is an imbalance in terms of funding of state

level HEIs by the central government where some states

are more benefited by the grants than others due to

ineligibility of many such institutions to receive grants from

funding agencies of central government and colleges

receive lesser funds than what they request for

development purposes.

Intra - State Allocation of Resources

After receiving the requests for grants from state level

universities and colleges, the committee for grants

approval set up by the respective state government,

approves the requests for the financial year. The amount of

grants to be allocated to different institutions majorly

depends on the availability of funds with the state

education department and the immediate priorities for

meeting the requirements of the expenses of the

institutions. However, the initiatives and negotiation

capacity of the leader of the institution also plays an

important role in managing to get the requested

budgetary amount and timely receipt of it for the

institution. The allocation is line-item based and is made at

two different levels. First, the public universities and

colleges are allocated funds to meet the expenditures

towards, salary of teaching and non-teaching staff,

instruments, equipment, furniture and lab equipment,

smart classes and day-to-day maintenance. Second, the

private aided colleges receive grants-in-aid for salary of

permanent teaching and non-teaching staff and for

research purposes.

Since the amount allocated is based on the availability of

funds with the state education department and

exchequer, and based on the requirements or priorities to

cover certain expenses than others (e.g. salary of regular

employees), the amount allocated may or may not cover

the total requirements of the institutions. In majority of

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POLICY BRIEF 4

Financing of Higher Education

instances, the regular maintenance expenses are cut from

the allocated amount whenever there are insufficient

funds with the state governments. This has long term

implications in ensuring quality in higher education.

Intra - Institution Allocation of Resources

The allocation of funds between the departments within

the university or college depends on the amount of funds

received from the respective state education department

or Directorate of Education for recurring expenses and

from RUSA or other funding agencies for non-recurring or

development expenses. In case of inadequate or

insufficient resources, deficits can be experienced under

all the three heads such as; salary, non-salary and capital

head. Since the allocation of funds is line item based,

deficits under one head can't be adjusted with the funds

received under another head. Therefore, in case of

deficits, the expenses under different levels are reprioritised

wherever possible. The priority is decided by the

concerned heads of the institution looking at the options, -

which are negotiable and which are non-negotiable.

When there is a deficit under the capital head, certain

activities are carried out on priority basis and a few

activities planned under the head are postponed to the

future till adequate fund is available for those activities.

When there is a deficit under non-salary or project head,

the respective institutions resort to cost saving or cost

cutting measures. For example, repair and maintenance

activities may be cut down or manage with less staff (or not

appointing new staff) for several activities for certain

period of time.

And finally, in case of deficits under salary head, which is

an important non-negotiable head as salary needs to be

paid to the regular teaching and non-teaching staff. This is

the most difficult item for the respective institutional heads

for making any adjustments. The expenditure under salary

head is recurring and unavoidable. Experiencing deficits

under this head many a times compel the institutions to

pay the salaries of the regular staff of the institutions by

making adjustments from the provident funds or by

borrowing loans from the banks or go for overdrafts.

However, there are instances in certain state level

universities and colleges where the regular teaching and

non- teaching staff receive their salary in three to nine

months and that too paid gradually across several months.

Apart from the adjustments made to the budgetary heads

in case of deficits, institutions explore alternative and

innovative financing options to mobilise additional

resources to meet the requirements of their day-to-day

expenses of the institution. They are; cost saving or cost

cutting measures, cost sharing measures and income

generating activities. The Policy Brief 2 deals with these

measures as explored by the higher education institutions.

Areas of Intervention

With the changing dynamics of resource allocation to

public higher education institutions, new strategies need to

be explored to facilitate targeted funding of resource

deficient institutions. The following strategies may be

considered to uplift the state level universities and colleges

those are at the verge of deterioration.

Ÿ Per student expenditure varies across disciplines.

Therefore, there should be well established and

objectively verifiable criteria to allocate resources, e.g.,

student based or graduation based criteria etc.

However, the job oriented disciplines such as medical,

management, commerce, economics, life sciences,

etc. can get private funding compared to disciplines

such as history, philosophy, etc. Such conventional

disciplines should continue to receive public funding.

Ÿ The colleges and universities basically serving the

interior rural regions of the country are the most

vulnerable and need public funding for revitalization.

Such institutions may be targeted while allocating

resources irrespective of the disciplines and courses

offered by them.

Ÿ Targeted allocation of funds as per requirements to the

higher education institutions serving students from poor

social backgrounds, irrespective of location and

disciplines/courses offered by them, to uplift their

financial and academic status.

Ÿ Targeted allocation of funds as per requirements to the

higher education institutions serving students from poor

economic backgrounds, irrespective of location and

disciplines/courses offered by them, to uplift their

financial and academic status.

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POLICY BRIEF 4

Changing Dynamics of Resource Allocation to

Higher Education Institutions in India

Ÿ Targeted allocation of funds as per requirements to the

higher education institutions with all female students or

majority of female students, irrespective of location

and disciplines/courses offered by them, to uplift their

financial and academic status.

Ÿ For effectiveness in resource allocation, a monitoring

mechanism needs to be placed at state level for

targeted allocation of resources to vulnerable higher

education institutions, keeping into consideration the

type of vulnerability such as, gender or social category

or economic status. One student should be benefitted

in terms of financial resources under one category only.

The monitoring mechanism should also ensure efficient

utilization of the allocated resources to the targeted

higher education institutions without political and

bureaucratic intervention.

Ÿ Ensuring equitable distribution of grants for research

and innovation by multiple agencies across disciplines

and institutions at centre and state level as per

requirements with a project monitoring unit (PMU) in

place by respective funding agencies for efficient

utilisation of the allocated resources.

Ÿ Enhancing the effectiveness of RUSA funding by

expanding its coverage (both for state universities and

colleges) for small infrastructure (for IT & e-resources,

labs, repair and maintenance expenses, etc.), books

and journals (both online and offline, considering cost

effectiveness), etc.

Ÿ Interlinking of departments under effective institutional

leadership for efficient intra-institutional allocation of

resources across disciplines and regular payment of

salary for overall growth of the institutions.

Conclusion

There is a requirement of both macro as well as micro

approach to tackle the problems associated with the

institutions of higher learning at the state levels which

caters to the major share of enrolments of the country.

India being the second largest higher education system in

the world having its own ranking framework, is at an

important juncture where a serious policy action is needed

to address the issues of vulnerable universities and colleges

at the state level. These institutions of higher learning are

also catering to the students from deprived sections of

population from rural regions. But they are incapable to

overcome the financial crunch and therefore are at the

verge of deterioration. Otherwise, India would end up with

two different categories of higher education institutions,

one with the potential to uplift their ranking by virtue of their

capacity to manage with alternative sources of funding

and the other category particularly the institutions at state

level struggling with deficits, shortages of teachers, non-

academic staff, lack of infrastructure and inefficiencies

and thereby ending up with poor quality education. There

is the need of targeted funding of such institutions with a

modified strategy of resource allocation.

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POLICY BRIEF 4

This policy brief is prepared by Jinusha Panigrahi, Centre for Policy Research in Higher Education (CPRHE),

National Institute of Educational Planning and Administration (NIEPA), New Delhi.

Policy Briefs 4 and 5 are primarily based on a large-scale CPRHE research study employing a questionnaire-

based survey of students and faculty members, interviews with the administrative and academics heads of

the colleges and universities, government higher education departments and State Higher Education

Councils (SHECs), focus group discussions with students & faculty members in selected higher education

institutions across five states, namely, Bihar, Odisha, Punjab, Telangana and Uttarakhand.

Financing of Higher Education

Introduction

The competing demand for public funds has resulted in an

emphasis on the priority sectors including social sector

such as health and education. And within education

sector, school education has received more priority at the

policy level for allocation of limited public resources

compared to the higher education sector. This has led to

such allocations of resources to higher education which

are not commensurate with the growing social demand

for higher and technical education. The impact of

inadequate funding from central and state government

has been experienced by public higher education

institutions at different levels differently. The responses to

decline in public funding varies across institutions with

certain similarities common to all the institutions. When

resources allocated to the public higher education

institutions is inadequate, the diverse alternative and

innovative financing options are explored by the

institutions to mobilise additional resources to meet the

rising day to day expenses.

This policy brief highlights several resource mobilisation

strategies as explored by the public higher education

institutions when they experience a paucity of the

resources allocated by the funding bodies. And the

required interventions to facilitate the higher education

institutions to overcome the challenges in resource

mobilisation keeping into consideration the concerns for

access and quality.

Strategies for Resource Mobilisation

The policy orientation towards privatisation of public

higher education institutions, with the introduction of

several cost-sharing measures, has been the most

practised method since the time of new economic reforms

in the 1990s. Student fees and student loans are widely

practised cost-sharing measures contributing to resource

mobilisation for higher education. More recently, in

the recent decades, the income or revenue generating

models at the institutional level have been encouraged

to complement the resource requirements of higher

education institutions. While earlier education policies

and programmes recommended for several cost

sharing measures for resource mobilisation, the

National Education Policy (NEP 2020) recommends

an encouragement to philanthropic and alumni

contributions to generate funds to meet the additional

funding requirements of higher education institutions.

The several strategies for resource mobilisation adopted at

the institution level are discussed in the following sections.

Cost saving or cost cutting measures

The limited resources available for day-to- day activities for

developmental and maintenance purposes are shared by

the departments. Such expenses are meant for

conducting research, conferences, seminar, workshop,

participation in such activities organised by other

institutions at local, national and international level, etc.

There is a variation in the amount shared by the

departments as per their requirements and it also depends

on the leadership of the respective departments.

Excluding salary payment, the other benefits given to the

employees of the universities and colleges such as,

medical benefits, child education, insurance, LTC, etc., are

either not given or are being reduced substantially over

the years due to insufficient resources available for this

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POLICY BRIEF 5

2023

Resource Mobilisation Strategies by

Higher Education Institutions in India

purpose. With the incapacity to employ new teaching and

non-teaching staff, institutions manage with temporary,

guest, part-time, ad hoc and retired staff. Similarly, as cost

cutting measure, the institutions opt for multitasking for

teaching and non-teaching activities by managing with

limited teaching and non-teaching staff that impacts the

efficiency.

Cost Sharing Measures

Sharing of the cost of education with students by raising the

fees of the existing courses or through the introduction of

self-financing courses in public higher education

institutions are two important measures in this regard.

The institutional costs on admission, examination,

magazines, sports, library, laboratory, charges on water

and electricity provided to hostels, etc., are recovered

from the students to certain extent by the aided institutions.

Few other fees such as examination and assignments fees

and development fees to a certain extent contribute to

the total resources of the HEIs with variations across the

different types of universities. The private aided and

autonomous colleges mobilise resources from

development fee, sports fee, library fee, seminar fee for the

courses offered in regular mode. The fees charged by

central universities for technical and professional courses

such as engineering, medical sciences, management

studies, etc., are comparatively higher than general

courses which adds to a certain extent in the resource

requirements of these universities.

Cost-sharing, by offering self-financing courses in technical

and professional streams, is the most popular method of

resource mobilisation particularly by private-aided

colleges. The central universities and state level universities

and colleges have not yet successfully explored this option

of resource mobilisation. Introduction of short-term courses

and programmes to contribute to meet the resource

requirements of the institution has been explored by

certain institutions. However, courses offered through

distance mode has contributed to a part of the resource

requirements of many state level universities. Therefore, to

pay the increasing fees in higher education institutions,

education loan has become a popular cost sharing

measure for financing technical and professional courses.

Income Generating Activities

With the limited scope for the cost-sharing measures, the

central and state level universities resort to several income

generating measures to meet their resource requirements

due to the inadequate funding from the central and state

government. The most popular income generating

measures are renting out institutional infrastructure such as

guest house, examination hall, seminar hall or multi-

purpose hall, playground, auditorium, etc.; contribution

from alumni, research and consultancy activities,

university-industry linkages etc. Few universities and

colleges rent out their available unused land for

agricultural purposes like cultivation.

However, mobilisation of resources is found to be

challenging and the challenges are different for different

institutions in Indian context.

Challenges to Mobilise Resources

Catering to the majority of enrolments from poor social

and economic background of the concerned region, any

attempt by the state universities to increase fees of the

courses offered in non-self-financing mode has faced

strikes and protests from the student community. Due to

lack of infrastructure, many universities and colleges are

able to offer courses under self-financing mode in limited

numbers. With the lack of new appointments under

sanctioned positions, the academic staffs are

overburdened with lectures while managing between self-

financing and non-self-financing mode of lectures in every

semester/year. Quality is a concern for certain institutions

when some lectures are managed by temporary teachers

without desired qualifications and inadequate

remunerations.

Mobilisation of resources is challenging and the challenges

are different for different institutions. The central level

institutions are better placed in this regard needing little

more efforts to explore alternative measures to mobilise

resources rather than relying only on government sources.

While state level universities face difficulties in generating

income by raising fees and renting out infrastructure

facilities due to inadequate or improper (bad conditions)

infrastructure facilities, the government colleges at the

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Financing of Higher Education

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state level find it difficult to get engaged in research

projects or consultancy activities along with inadequate

infrastructure facilities to generate income. With all the

efforts to mobilise resources through different sources, the

institutions particularly the central universities are unable to

utilise them for development purposes as the additional

mobilised amount is adjusted with the maintenance

grants, they receive from the funding bodies in the next

financial year.

Areas of Intervention

Resource starved institutions require public financial

support to come out of the deteriorating conditions to

cope up with the rising enrolments and enhancing their

standards to be able to manage on their own for the day-

to-day functioning. The necessary interventions are as

follows:

Ÿ Targeted funding of state universities and colleges to

uplift their potential to meet the basic infrastructure

requirements and gradually being capable to

mobilise resources through various means.

Ÿ Advocacy and consultations by higher education

departments or respective state higher education

councils (SHECs) to spread awareness among the

resource deficient institutions to understand different

ways and means to mobilise additional resources and

developing administrative capacity/skills of the

leadership to be capable to mobilise resources from

alternative means in innovative ways.

Ÿ Incentivising (by retaining a certain share for

development purposes) institutions and departments

who are capable to generate additional resources

through several means rather than relying only on the

student fees.

Ÿ Interlinking of departments within the institutions to

strategise several ways for resource generation in a

multi-disciplinary set up.

Ÿ Strategising multiple options for collaborations

between the higher education institutions in different

locality to pool together the infrastructure facilities

(existing or new created under RUSA) and utilise and

maintain them collectively and efficiently.

Ÿ Encouraging philanthropic contributions from

institution alumni, local-area development funds,

MP/MLA funds and establishment of alumni or local

area associations by the institutions and facilitating

regular meetings of such associations. Some of these

measures are also suggested by NEP 2020 and widely

used by the institutions in developed and certain

developing countries for mobilisation of resources.

Ÿ Encouraging and facilitating academia and industry

linkages by taking advantage of location of the

institution near to the industries or companies.

Ÿ Promoting innovations, research and consultancy

activities and short-term courses to generate

re s our c es for de v elo p men t pu rpo s es a nd

enhancement of quality.

Ÿ Filling up of vacant teaching and non-teaching

positions and skill-based training of teachers and

administrators would help implement best practices to

generate resources without impacting access of

students from vulnerable sections of the society.

Ÿ Timely payment of salary to the institutional teaching

and non-teaching staff and remunerations as per the

rules to all to enhance efficiency and quality therein. In

return, the institutions must get engaged with social

development research and extension or outreach

activities to connect with the society at local level.

Ÿ Giving more autonomy to the institutions in day-to-day

functioning without bureaucratic intervention.

POLICY BRIEF 5

Resource Mobilisation Strategies by

Higher Education Institutions in India

Conclusion

The need of the hour in the era of technology, innovations

and knowledge economy is gradual reduction and

elimination of horizontal and vertical inequality between

the higher education institutions in India. This is possible with

concerted efforts and pragmatic approach by policy

makers, higher education departments, directorate of

colleges and educational practitioners at the centre and

state levels taking into account the ground realities and

practices. A targeted allocation of grants, both recurring

and development grants, to vulnerable universities and

colleges at least for few years and thereafter equal

allocation of grants to similar kind of institutions as per their

budgeted expenditure would be able to meet the

objective to a greater extent. The bottom-up approach

would help resource starve higher education institutions

particularly at the state level to uplift their financial

conditions to enhance quality of education.

Resource mobilisation would not be the only solution to

meet the rising expenses of the higher education

institutions due to the growing social demand, addressing

equity concerns, emphasis on quality enhancement,

employability and relevant research in higher education. It

is rather important to ensure efficient utilisation of

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POLICY BRIEF 5

This policy brief is prepared by Jinusha Panigrahi, Centre for Policy Research in Higher Education (CPRHE),

National Institute of Educational Planning and Administration (NIEPA), New Delhi.

Policy briefs 4 and 5 are primarily based on a large-scale CPRHE research study employing a questionnaire-

based survey of students and faculty members, interviews with the administrative and academics heads of the

colleges & universities, government higher education departments and State Higher Education Councils

(SHECs), focus group discussions with students & faculty members in selected higher education institutions

across five states namely, Bihar, Odisha, Punjab, Telangana and Uttarakhand.

allocated and mobilised resources by the higher

education institutions to adjust the gaps and

increasing cost of higher education. adjust the gaps

and increasing cost of higher education

Example of Good Practices: Innovative Strategy

for Resource Mobilisation

The case study institutions made conscious efforts by

implementing innovative strategies to mobilise

resources to overcome financial deficits:

Ÿ There are restrictions by the Hill Development

Authority in the expansion of the institutional

infrastructure due to the location of the

institution in the hilly region. Therefore, 'contract

farming' is found to be one significant

contributor as a source of income generation to

this institution located in hilly region.

Ÿ Efforts for 'University-Industry linkages' are made

by a case study institution. The Institution have

linkages to nearby industrial city which results in

students having blue collar jobs and other low

paid jobs for semi-skilled individuals after getting

their degree to get engaged with the industry.

Financing of Higher Education

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POLICY BRIEFS

Policy Brief 1

Equalising Access to Higher Education in India

(Nidhi S. Sabharwal and C. M. Malish, 2017)

Policy Brief 2

Achieving Academic Integration in Higher Education in India

(Nidhi S. Sabharwal and C. M. Malish, 2017)

Policy Brief 3

Developing Socially Inclusive Higher Education Campuses in India

(Nidhi S. Sabharwal and C. M. Malish, 2017)

Policy Brief 4

Changing Dynamics of Resource Allocation to Higher Education Institutions in India

(Jinusha Panigrahi, 2023)

Policy Brief 5

Resource Mobilisation Strategies by Higher Education Institutions in India

(Jinusha Panigrahi, 2023)