Tuesday, September 22, 2009

National Higher Education Finance Corporation proposed

In a major step aimed at attracting serious players in higher education and ensuring that existing ones do not face financial constraints for expansion, the Ministry of Human Resource Development (MHRD) has mooted the idea of a National Higher Education Finance Corporation (NHEFC).

Union HRD minister Kapil Sibal told India's leading national daily, The Times of India, that such a body is needed for higher education. He said the ministry is examining the proposal and an internal note has been circulated. ‘‘It is difficult to finance new higher educational institutes through plan expenditure alone,’’ he said, adding that a final decision is yet to be taken. But sources said NHEFC could be on top of the ministry’s next 100 days’ agenda.

NHEFC, which will have an authorized share capital of Rs. 10,000 crore (Rs. 100 billion), proposes to directly finance any university duly recognized under law for its creation or improvement of infrastructure. It will grant loans and advances to any scheduled public sector bank or such other financial institutions approved by the corporation for refinancing of educational loans to students. It will also provide venture capital to a university to incubate any scientific or technological idea or product that has emerged as an outcome of any research undertaken by the university.

The proposed NHEFC will also set up an endowment and corpus management fund of higher educational institutions which can manage the endowment funds of the universities and higher educational institutions and provide a higher return than bank deposits. Aimed at philanthropy, NHEFC will directly support at concessional rate establishment of any higher educational institution that has raised at least 25% of its project cost through charitable donations or contributions.

The internal note estimates that the requirement of funds for expansion of higher education will be around Rs. 60,000 crore (Rs. 600 billion) in 2009-10 which will go up to Rs. 1,55,000 crore (Rs. 1550 billion) in 2016-17 to achieve the objective of 25% Gross Enrolment Ratio. NHEFC can be set up through an Act of Parliament or can be a professionally managed corporation under section 25 of the Companies Act.

Source: The Times of India

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