NITI Aayog Proposes Education Reforms: New Finance Agency and Fee Flexibility for State Universities

In an effort to address the financial and operational challenges faced by State Public Universities (SPUs), NITI Aayog has proposed significant reforms aimed at improving their sustainability and quality. The recommendations include the establishment of a dedicated finance agency akin to the Higher Education Financing Agency (HEFA), fee autonomy, and diversified funding sources. These suggestions, outlined in the newly released report titled Expanding Quality Higher Education Through States and State Public Universities, are considered vital to achieving the goals of the National Education Policy (NEP) 2020.

State Public Universities, which cater to over 80% of India’s higher education student population, face numerous challenges stemming from inadequate government grants, dependence on traditional revenue streams, and limited autonomy in financial decision-making. The report highlights the need for a six percent allocation of the country’s GDP to education, a figure previously recommended under the NEP 2020.

One of the central recommendations is to establish a HEFA-style finance agency exclusively for SPUs. HEFA, a joint venture between Canara Bank and the Ministry of Education, has played a crucial role in financing infrastructure development and research projects at educational institutions. NITI Aayog suggests a similar agency could provide long-term financial stability to SPUs, ensuring they have the resources needed to maintain quality education and expand research capacities.

The report further recommends granting SPUs the autonomy to adjust fees by 5-10% annually to account for inflation, with safeguards such as scholarships and fee waivers for underprivileged students. Select SPUs with sound financial management could pilot this programme, which would be closely monitored for its impact on finances, enrolment, and educational quality.

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Diversification of revenue streams is another key focus. The report encourages universities to expand self-financed programmes, provide consultancy services to industries and government agencies, and strengthen alumni engagement to drive financial contributions. Public-private partnerships (PPPs) are also seen as crucial to supplement government funding and enhance employability initiatives.

Additionally, NITI Aayog calls for tax exemptions on revenue from CSR grants and research activities to provide further financial relief. These recommendations come at a time when Indian higher education institutions are under increased scrutiny for their financial and academic performance, with recent opposition to changes proposed under the NEP 2020 further intensifying the debate.

With 80 policy recommendations spread across four key thematic areas—quality, funding and financing, governance, and employability—NITI Aayog envisions a transformed higher education system where SPUs emerge as centres of excellence and regional development drivers.

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