IIT’s Worried With Shift from Grants to Loans for Infrastructure



The central ministry has declared a new provision according to which, a big change is expected in the funding model for all Centrally Funded Institutions of the country. The same has alarmed various CFIs such as IITs, NITs and IIMs. The new scheme named- “RISE” is short for Revitalizing Infrastructure and Systems in Education. The chance was introduced through the Union Budget this year.

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According to the new scheme, the Govt. will be providing money to CFIs for new infrastructure and development projects but it would not be considered as funds and instead is to be treated as loan. The loans will be taken as 10-year loans from “HEFA” or Higher Education Funding Agency”.

According to reports, Govt. has allotted a quarter of loans on offer and merely Rs. 25,000 Crore is assigned for 23 IITs. IIT authorities have questioned the same and have raised concerns that this sudden shift of funding to loans can eventually harm their financial stature. The institutes may have to increase the tuition fee of courses offered at the institutes. Registration for JEE Main 2018 for IITs is also likely to get expensive as it will no longer be funded by the Government.

The older IITs are the one raising the issue from the front. The same will be raised in front of the Honorable President of India in a meeting. President Ram Nath Kovind is supposed to have a meeting with all the heads of IITs, NITs and IISERs to discuss the issue in depth.

The reason of the older IITs’ vicious movement against the “RISE” scheme is not completely selfless. The institutions which are built after 2008 only have to pay the 25 % of the principal amount of the loan whereas the remaining have to pay the wholesome principal amount of the loan during 10 years. In both the cases the interest of the loan will be given by the Govt. The directors of IITs are concerned about raising money to make payment for the loan amount as there are only three ways for an educational institution to raise money for its operation–

  1. Research projects: This may one of the best fund raising opportunities in western universities but in India the research funding is not paid to the institutions directly which results in less funds.
  2. Alumni Donation: Again in India this option has not gained popularity yet.
  3. Tuition Fee: Fee of reputed centralized institutions like IITs are highly subsidized. The tuition fees obtained from students cannot be considered enough to pay the full amount of loans measuring in Crores.

Despite these factors the Govt. has disregarded the chances of instability in the financial structure of CFIs. According to the Govt. older IITs and other CFIs earn a high amount of annual turnover each year which can be as large as Rs. 40 Crore.

The Govt. also mentioned that the loan is not mandatory. Govt. will still be funding the institutions their running expenses in the same manner as before. If there is any requirement for extra funding, then only CFIs should opt for loan. Due to the “RISE” scheme the CFIs can loan 10 times the amount they can escrow. And as a matter of fact IITs will be assigned the largest percentage of the total loan value. Entrance exams for IITs- JEE Main 2018 will be conducted April 15- 16, 2018. Lakhs of students appear for the exam every year.

The above scheme has no effect on private engineering colleges. The fee and funding of private engineering colleges will remain the same. Students are advised to appear for private engineering exams such as SET 2018, VITEEE 2018, MU-OET 2018.

  • WinNew

    I’m afraid that this would be highly counterproductive, as marketing & managing finances is definitely not the strength of CFIs. Cutting of finances to education, is short sighted, and that too to top engg institutions! Hope govt reviews it’s decision.