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IITs Warn of Fee Hike as Loan System Replaces Funding Grants, DU Too Voices Concern

Representatives of IITs met the President on Tuesday to raise concerns that raising fees to repay loans to HEFA is not an option and that internally generating the required funds would be difficult.

Eram Agha | News18.comEramAgha

Updated:March 6, 2018, 7:50 PM IST
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IITs Warn of Fee Hike as Loan System Replaces Funding Grants, DU Too Voices Concern
Representative image.
New Delhi: Indian Institutes of Technology have expressed concern that taking loans from the newly-constituted Higher Education Funding Agency (HEFA) for infrastructure projects may force them to increase fees.

Representatives of IITs met the President on Tuesday to raise these concerns, saying that raising fees to repay loans to HEFA is not an option and that internally generating the required funds would be difficult.

“The concern is repayments of these installments from the internal resources may result in shortage of fund available for the regular recurring expenditure of the institute,” said the source from IIT Bombay.

The Delhi University Teachers Association has also expressed concern about HEFA, saying that this direction of government policy is destroying public character of higher educational institutions, making them dependent on the market by requiring them to incrementally fund their expenditures out of revenue generated through commercial (educational) services. “This is privatization of education,” they said.

In August 2017, Ministry of Human Resource Development had directed all centrally funded higher education institutes to send their project funding proposals to HEFA instead of the ministry.

HEFA was announced in the Union budget 2018-19, scrapping grant-in-aid for new infrastructure in centrally-funded institutions (CFIs) such as the IITs, NITs, IIMs, IIITs and central universities. HEFA will finance these projects through 10 year loans.

Earlier, these institutes would send project proposals to MHRD, which provided grants to fund those projects it approved. However, with the establishment of this new agency, these institutes now have to borrow the money required to fund their projects.

There is still ambiguity regarding the repayment of the interest component of the loan, whether it would be borne by the ministry or the institute. An MHRD source told News18, “The principal portion will be paid by the IIT and the Government will assist in paying the interest portion.”

The IIT-B source said, “The initial understanding was that interest component of the loan would be borne by the ministry, which has not been cleared till now.”

A separate dispensation is being considered for the newer IITs which do not have resources to service the loan, details of which are still being worked out, the MHRD source said.

HEFA approved projects worth ₹2,066.73 crore in six institutions in November 2017.

IIT-B has sought Rs 521 crore for the projects like construction of 17 hostels, 64 faculty quarters, construction of combined building for 3 departments and a research park under the new initiative called - Revitalising Infrastructure and Systems in Education (RISE).

If that amount is sanctioned, the Institute would repay Rs 52 crore per annum as repayment. Furthermore, interest would also have to be paid over and above that amount. It could not be specifically calculated as there is no official rate of interest. A source said that informally IIT-B has been told that 8.5% interest will be levied.

The IIT-B is planning the re-payment of loan from the internal revenue generated by the institute, which comprises research and consultancy, income from tuition fee etc. They have a requirement of another Rs 200 crore for the coming year for infrastructure development.

Apart from them, IIT Delhi took Rs 200 crores last year and has again asked for an Rs 250 crore loan. An II-D source said that funds for repayment of these loans will come from increasing the charges for some of the subsidized facilities on campus like hostels and dining hall.

“The charges for some utilities will increase to pay the loans. Some services are heavily subsidized. There is no clarity on interest payment - if we have to bear the burden or the government. It is not written anywhere. If interest payment also falls on us there will be drastic changes,” the source said.

NIT Surathkal in Karnataka took an Rs 80 crore loan for a Central Research Facility Central Research Facility (CRF), where all departments will avail the research facility in one roof. Such center is expected to attract more industry for Industrial consultancy. “From the revenue generation, institute would require to repay the Principal Loan amount. For that the institute is planning to earn more revenue through the Central Research Facility, where in all the departments will avail the research facility in one roof. Such a center will attract more industry for Industrial consultancy,” An NIT source told News18.

With a target range of 10 to 15% increase in the Revenue generation every year, NIT Suratkal is planning to generate more revenue by exploring more avenues in the areas like industrial consultancy, testing and consultancy, attracting more Alumni contributions and usage charges for existing facilities – like canteens, banks, shops, playgrounds, swimming pool, lab facilities. Student fee will not be affected, they said.

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| Edited by: Ashish Yechury
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