Mains Article

Should we do away with subsidies for higher education? [Mains Articles]

In the wake of public protest over a proposed fee hike by the students of Jawaharlal Nehru University (JNU), a public debate has been generated whether higher education should be subsidized or not.
By IT's Mains Articles Team
November 25, 2019


  • Introduction
  • How does subsidy increase equality of opportunity?
  • Is it correct to say we did not harness the potential of public education in the post-liberalisation period, when income grew, and if yes, why did that happen?
  • Is there any evidence that subsidies go disproportionately to the rich?
  • How much of expenditure should be recovered from students and others?
  • The Punnayya Committee and others favoured 20% as a ceiling.
  • what should we do to increase access, equity and quality in the milieu of higher education being significantly privatised?

Should we do away with subsidies for higher education?

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The former JNU Vice-Chancellor Yoginder K. Alagh and Professor of Central Institute of Education, Delhi University, Shyam Menon underscores the importance of greater inclusiveness, diversity and quality in Higher education.


Professor Y.K. Alagh (YKA) Views

Through Higher education economy of the future is built. The Indian software service, a major source of growth of economy, wouldn’t have been possible if institutes like CSIR, IITs and Central Universities had not been established. Rather than just about machine it is about India’s men and women who have the capability to be able to design systems.

higher education 2

  • The notion that higher education is not funded or subsidized is not true historically. In most European countries, fees account for less than 10% of the expenditure on higher education.
  • In US fees account for more than 30% to 40% but they have huge scholarship schemes. The students are taken care of after they get admission into the college.
  • The ratio of students being selected in India’s premier colleges like JNU, IITs and IIMs is very small. Tens of thousands of students apply but few get selected. All those children are the future of a country. They become Collectors, SPs, Chief Secretaries, DGs and so on. Therefore, countries must put money into higher education.
  • Unless we subsidies the higher education, these things don’t take place. We must give our young kids an opportunity to develop.

Professor Shyam Menon (SM) Views

  • Higher education used to be the exclusive preserve of elites, and several generations of the rich and privileged in India enjoyed the benefits of subsidised education.

higher education 3

  • Under those circumstances, there used to be a silent argument against subsidising higher education. But higher education has since changed and it has expanded both through public and private institutions.
  • A whole new generation has graduated out of a newly expanded school system and many of whom are first-generation aspirants and they are seeking access to higher education, particularly in public institutions.
  • Now, the more affluent are migrating to private institutions and institutions overseas.
  • Therefore, it is an irony that just when large numbers of the poor and the marginalised are beginning to express their aspirations for social mobility through access to public higher education there is a heightened pitch in the hue and cry demanding removal of subsidies. This is grossly unfair.

How does subsidy increase equality of opportunity?

YKA Views

  • The children of rich parents will always find education in India and abroad that they can pay for. 
  • A society where 50% of the people are poor, the talent would be lost if the children form poor household doesn’t get in higher education. Therefore, a major source of growth will be gone for the country.
  • The children who are still to be born, will need good higher education. That needs a strong plan for the future. This is again something which needs a public effort, need a different management style, need autonomy and accountability.
  • The state has to fund this need of the future as a priority. If it does not do it, it is neglecting the country’s future. And if people misuse it, then sack them. Public institutions have to be run in a responsible manner.
  • There should be ways to analyse a students’s deprivation status which sometimes can be faked to get financial assistance but in the end a talented person doesn’t go without education.

SM View

  • Inclusiveness and equity are very important characteristics of a good public institution. And, over the years, this has actually increased in public institutions and that is entirely because of subsidy.
  • The public higher education cannot have any equity or inclusiveness without public funding, and subsidising it.
  • In Ambedakar university, an experiment was undertaken where below a certain income level, it was made possible for students to participate in higher education without payment of any fee. The fee structures were different for different kinds of programmes based on marketability, affordability and input costs. Yet, there used to have enough surplus from that to use as a corpus, to subsidise student welfare, assistance to travel, guest accommodation for those who did not get it in hostels and so on.
  • There was a credo which Ambedkar University that used to print on its prospectus: No student who had been admitted would be deprived of an opportunity to pursue studies just because he/she had financial difficulties.
  • It was the university’s responsibility to see that he/she got the opportunity.

Is it correct to say we did not harness the potential of public education in the post-liberalisation period, when income grew, and if yes, why did that happen?

YKA View

  • In 1992, when Dr. Manmohan Singh signed the agreement with the Bretton Woods countries that meant our budgets had to be curtailed, and that meant a ceiling on the money available for universities.
  • In a democratic country, salaries keep rising, other costs keep rising. There was some respite because modern methods of education actually save money like use of Internet and so on.
  • There again, we needed capital expenditure and in those days even access was a question.
  • The ISRO was given the right to put up an antenna on the JNU library, which had 12 floors, so that they could download space messages and, in return, they gave us access to Internet, which was very important in those days.
  • In those days if the UGC did not give money, the only option left to college (JNU) was to go to Prime Minister Narasimha Rao and the funds were released.
  • The real problem started emerging when good State Universities began getting into trouble , for example, the Presidency universities — Kolkata, Madras, Bombay — they got into serious financial difficulties. Then the UGC Advanced Centres was designed. But those were all temporary solutions.

SM view:

  • In the post-liberalisation era, public expenditure in higher education went through a period of stagnation in real terms and the per student public expenditure actually declined dramatically.
  • All this happened while private higher education saw a phase of impressive expansion.
  • So, while the overall intake of students in higher education increased considerably in the post-liberalisation era, a large proportion of this expansion was accounted for by expanding private sector.
  • Growth in national income did not result in an increase of public expenditure for education as a whole.
  • There was a shift in the focus of funding in the 1990s from higher education to primary education.
  • The social safety net that came along with the structural adjustments in terms of public spending that the Finance Minister signed with the IMF and so on brought stagnation in public expenditure for higher education.
  • The post-liberalisation period had affected much more severely the State institutions.

Is there any evidence that subsidies go disproportionately to the rich?

YKA view:

  • There was a study done in the Gokhale Institute. It showed that unless you are very careful, the benefits can be skewed.
  • Giving opportunity to a poor child is one thing, giving equal access is another and that is a far more complex business.
  • Some universities try to do that. They have special sections, for example in JNU. The JNU students’ union was given money to help kids from poor families to get application forms and then to help them. With that the poor children had a better chance of not being rejected for admission.
  • The conscious efforts also make a big difference in opening up opportunity and that should be a part of our system.
  • Some of the schemes that we have — like giving access to the girl child and providing access to people from disadvantaged regions, PM’s schemes and so on, are a step in the right direction and we need to supplement them.

SM View:

  • There is considerable unevenness in the distribution of public finances.
  • Student subsidies for premier institutions like the IITs and engineering colleges are incomparably higher than those for universities and colleges, particularly for liberal arts institutions.
  • Similarly, there are major disparities in allocation of funds per student in Central universities and State universities, and between colleges in the metropolises and those in the mofussil towns, between mainstream and distance education.
  • In some of the well-known universities, it is the correspondence courses and the revenues that are generated out of them that are cross-subsidising the other programmes. It is like the poor kids are subsiding the rich kids.
  • Institutions where the poor and the marginalised access higher education, are likely to get a considerably smaller share of funding.

How much of expenditure should be recovered from students and others?

The Punnayya Committee and others favoured 20% as a ceiling.

YKA view:

  • It is a good idea and University administrations should be encouraged to look for funds, endowments, donations.
  • We have a rich tradition of people funding higher education and they tend to do it along religious and caste lines, but newer generation opportunities are emerging.
  • In most civilized countries of the world, a third of the cohort goes in for higher education, and it is much less in India today and particularly for women from backward areas.
  • We need to put in funds and there’s no question about that. For example, if along with housing, to a teacher, a fan and refrigerator is given to him, he will be willing to go to an adivasi district.

SM Views:

  • There is considerable divergence across public institutions in higher education in the proportion of revenue from students as a total of the operational expenditure.
  • There are States with a controlled fees, at the same time, many State universities are in a predicament where their salaries and pension liabilities constitute something like three-fourths or four-fifths of their expenditure.
  • There are subsidised courses and self-financing courses and there are unequal resources deployed. But there is a lot of divergence in terms of proportion of student fees to total operational expenditure.
  • The proportion tends to be somewhat greater in affiliating universities with large undergraduate programmes with economies of scale, in comparison with small unitary universities, with predominantly post-graduate programmes.
  • Some very large public universities could, by now be approaching the 20% mark as recommended by the Punnayya Committee and National Knowledge Commission.
  • In some cases, it was realized that rationalising student fees need not mean increase in fees across the board, for all programmes and students.

What should we do to increase access, equity and quality in the milieu of higher education being significantly privatised?

higher education 1

YKA view:

  • We have to keep writing and communicate.
  • There are parent-teacher associations, groups which have encouraged thinking about education in India.
  • Our effort should be to push for a healthy debate, which often doesn’t happen, on education and its process.
  • Through time, things will improve. So, 40 years from now, India’s progress towards equality and its progress towards a secular democratic entity would be a reality.

SM view:

  • There are private universities all over in India in every possible corner. It is complicated to make them adopt to the ideals of ensuring access, equity and quality in education.
  • The accreditation institutions and regulatory mechanisms should develop ways of assuring adoption of such measures in private institutions.
  • Accreditation bodies have not succeeded in persuading private institutions to implement statutory reservation policies till now, and it is a little vague whether it applies to them or not.
  • In a situation where 93% of India’s workforce is in the informal and unorganized sectors, there is a legitimate perception among the poor that accessing quality public higher education is their only chance to rise above from their poverty.
  • But access without assured quality is no access. If you agree that there cannot be any compromise on equity, inclusiveness or on quality in public higher education, then per student public funding has to increase drastically.


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