NITI Aayog suggests HEFA-like agencies, fee hike, self-financed courses for state universities

NEW DELHI: The union government’s policy think-tank, NITI Aayog, recommends that states establish finance agencies similar to the Higher Education Finance Agency (HEFA) to fund the expansion of state public universities. It has also recommended that state-funded universities start more self-financed programmes, be granted autonomy on matters of fees and be allowed to raise funds from public-private partnerships and CSR.

The agency’s report on state-level higher education – Expanding Quality Higher Education through States and State Public Universities – released on Monday points to difficulties with infrastructure upgrade, poor funding, insufficient expenditure on research and development (R&D), and other challenges. The recommendations are intended to address these challenges although the HEFA has proved controversial even at the central level and as per a government-commissioned study, caused overall funds available to institutions to actually shrink.

As per the All India State of Higher Education (AISHE) Report 2021-22 – the latest one available and cited in the NITI Aayog report, public state universities account for 81% of the total student enrolment among Indian institutions of higher education.

Further, as per the latest data on the University Grants Commission (UGC) website, last updated in January, 2025, India has 495 state public universities with Karnataka leading at 43, followed by West Bengal and Uttar Pradesh with 38 each. Over the last 14 years, the growth of government run institutions stands at over 50%.

NITI Aayog Report: 6% of GDP to HEFA loans

Before making its prescriptions on fundraising and fee hike, the report begins the funding section by recommending that the union and state governments together increase allocation to education to at least 6% of GDP – a figure bandied about since the 1960s but never touched. It also recommends periodic audit and evaluation of institutions covered by the RUSA scheme – now called PM USHA – which supports state institutions via a central scheme with funding shared between centre and states.

Then the report veers sharply away from public funding to recommend infrastructure loans to universities to replace grants. The HEFA was set up as a non-banking finance agency in 2017 to extend infrastructure loans to central institutions by raising funds from the private sector . It began by extending loans to premier Indian Institutes of Technology (IIT), followed by National Institutes of Technology (NIT), Indian Institutes of Science Education and Research (IISER) and central universities. As per the same report referred to above, by 2023, HEFA had caused college fees to rise across all these institutions.

A joint venture between the ministry of education and Canara Bank, as of December 31, 2024, the body had sanctioned Rs 43,000 crore and disbursed over Rs 21,590 crore to 106 higher-education institutions.

Self-financed courses

Along with loans, NITI Aayog stresses on increasing self financed programmes – colleges and courses that are not subsidised by the government – so that the public universities generate their own revenues. This has always been a bone to contention among teachers and students with fears of fee hike and affordability.

It recommends other measures, such as consultancy services and alumni engagement.

“Leverage leading SPUs’ expertise to offer consultancy services to industries and government agencies.Encourage development of robust alumni engagement programmes within SPUs to encourage financial contributions and support. Explore innovative funding models and PPPs to supplement government funding and support initiatives aimed at enhancing employability,” are some of the other recommendations.

The report, in fact, has a separate section to support tax exemptions for state public universities operating on self-sustaining models, particularly for revenue from CSR grants and educational and research activities.

It also recommends conducting audits and evaluations of existing RUSA (PM-USHA) projects in SPUs.

Also read Education Loan: Over 50,000 NPAs in credit guarantee scheme, but repayment rate encouraging, says minister

Autonomy on fees, 5-10% annual hike

The report recommends providing state institutions with the ability to increase fees and also decentralising the process, possibly an euphemism for doing away with fee regulation bodies.

“Grant SPUs the autonomy for inflation-adjusted fees within reasonable limits (e.g., around 5-10% annually) to meet various expenditure requirements, while providing scholarships and fee waivers for the socio-economically disadvantaged students. This flexibility can help address financial challenges and maintain operational efficiency,” the report stated.

Usually, in case of state institutions, there are fee regulatory commissions, with representatives from various stakeholders, which decide on the fees.

As a short term goal it recommends identifying a group of leading SPUs with strong financial management practices to pilot a programme with limited fee autonomy.

It also talks about adopting a “regulatory-facilitator model” where the state government provides enhanced autonomy to universities.

“Reform governance structures through transformative acts and policies to grant SPUs greater administrative autonomy while maintaining transparency and accountability. Enable a shift towards a ‘regulatory-facilitator’ model for SPUs and implement policy changes at the State Government level to grant SPUs greater autonomy in areas like curriculum development, faculty recruitment, and financial management,” the report states.

As a good practice, it has talked about the Gujarat Public Universities Act 2023, which according to NITI Aayog was a transformative process of abolition of traditional bodies such as the Senate and Syndicate, with a renewed emphasis on orientation, professionalisation, and standardisation.

It also recommends having a State Council for Higher Education (SCHE), which can carry forward the initiatives of the UGC.

In an interesting part,the report stresses on the need for including academics from humanities disciplines in decision-making.

Localised Accredition

At a time when the National Assessment and Accreditation Council (NAAC) is mired in controversy and corruption charges , the report talks about supporting the development of localised accreditation and assessment frameworks that align with India’s unique needs and priorities.

“Support restructuring of accreditation fees to make the process more accessible and affordable for colleges,” it adds.

The Aayog also wants regulatory bodies to allow universities to change syllabi up to 30% to meet local needs.

Revamping Administration and Faculty Recruitment

It advises on composing governing councils of SPUs with top quality academicians, researchers, and administrators, excluding political members.

“Statutory provisions should be made for the posts of Dean (Academic), Dean (College Development Council), and Dean (Research) in every SPU to enhance academic and research leadership and governance,” the report added.

On faculty recruitment, the report recommends a centralized recruitment model rather than individual universities handling recruitment exercises.

Promoting research, employability

The report recommends developing a National Research Policy, aligned to the Anusandhan National Research Foundation of the central government, outlining funding, collaboration, and performance metrics.

“Identify and establish research hubs in clusters of SPUs, based on core competencies of identified universities.Setup/establish an industry/government/community outreach/engagement centre in every SPU,” the report added.

The report recommends developing and offering higher education scholarships or fellowships for students and teachers from SPUs with research potential.

The body recommends reviewing and revising SPU curricula to integrate employability-focused modules.

“Develop learning outcomes that emphasize practical skills, problem-solving abilities, and communication skills. Internships or apprenticeships to be made mandatory as part of the curriculum, ensuring proper credit and guidance.Establish dedicated “Internship Banks” within SPUs to connect students with internship opportunities. Explore collaboration with Sector Skill Councils to develop apprenticeship programmes that bridge the gap between education and industry needs,” adds the report.