Learning to grow

Higher education needs to attract private funds

Infosys Chairman Nandan Nilekani’s headline-grabbing Rs 315 crore donation to IIT Bombay offers an uncomfortable reminder of the paucity of private finance in higher education. At a total of Rs 400 crore over several years, Mr Nilekani is among the most generous donors to an IIT— exceeding, for example, the Rs 100 crore that Rakesh Gangwal, InterGlobe Aviation co-founder, donated to IIT Kanpur last year, and equalling approximately the Rs 400 crore that a group of US-based alumni donated to IIT Bombay in 2021. But in terms of attracting private finance, the IITs remain the outliers in the notoriously underfunded public higher education system. One finding shows that between FY14 and FY21, central universities suffered a deficit of 20-33 per cent of their total expenditure. Part of the problem has been caused by the government’s chronic underinvestment in higher education over the years.

 
Proposals for centrally funded universities to raise funds through endowments have been doing the rounds for at least two decades. In 2017, state-owned Canara Bank set up the Higher Education Financing Agency (HEFA), a joint venture with the Government of India, to raise funds for higher education. In 2019, the government stated that funding to state-run incubators and public universities would qualify under the corporate social responsibility mandate for large corporations. Last year, the Centre released detailed guidelines for central universities to mobilise contributions. It also allowed these institutions to open accounts under the Foreign Contribution (Regulation) Act to accept foreign donations — a significant step, given the Centre’s retraction of permission to hundreds of organisations under this law.

 
Despite these relaxations and incentives, progress has been snail-paced. The HEFA has spent under half its sanctioned budgets to date. Delhi University’s proposed endowment fund has reportedly drawn the interest of some public-sector units. But given the number of Indians on the various global rich lists — the 2023 Forbes’ list, for example, has a record 169 Indian billionaires — there should neither be a shortage of private funding for higher education, nor a lack of inclination. This much is evident from the endowments that private universities are able to garner and the generous sums that leading Indian corporate chieftains have donated to the US alma maters, such as Wharton or Harvard. This in itself is a pointer to systemic weaknesses in India’s public higher education systems.

 

The IITs are relatively well run and can count on global alumni organisations. Few administrative systems of Indian universities and centres of higher learning can be described as models of dynamism, having been weaned on government funding. Now, they will have to transform themselves into savvy organisations capable of raising and, more importantly, managing private money. Doing so demands creating institutions staffed not just with academics but professional money managers of the kind US Ivy League universities maintain. Harvard’s endowment, for instance, is managed by a non-profit wholly owned subsidiary of the university made up of more than 14,000 funds and assets under management of $53 billion (as of 2021). Building this sort of critical mass takes time — Harvard’s endowment started 49 years ago — and commitment. The second sticking point for private endowments could be the government’s proclivity for determining the course and nature of academia. Academic independence has been the cornerstone of the western university system, which India hopes to emulate. This remains a challenge in India.