Union Cabinet expands scope of funding under HEFA to medical, schools sector

Union Cabinet expands scope of funding under HEFA to medical, schools sector
Abhay Anand | Jul 4, 2018 - 4:27 p.m. IST
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NEW DELHI, JULY 4: The Cabinet Committee on Economic Affairs (CCEA) has expanded the financing facility under the Higher Education Financing Agency (HEFA) to medical and school education sector. The CCEA has also approved increasing HEFA’s capital base to Rs. 10,000 crore. Further, the financing agency has been tasked to mobilise Rs. 1,00,000 Crore for Revitalizing Infrastructure and Systems in Education (RISE) by 2022.

To include more institutions in the list of HEFA funding beneficiaries, especially the institutions established after 2014, CCEA has come up a loan facility under a ‘five window’ formula which provisions for modalities of repaying the principal amount.

Union Minister of Human Resource Development (HRD), Prakash Javadekar making the announcement on twitter said, “Landmark decision of Union Cabinet today approves #HEFA (Higher Education Funding Agency) to mobilise Rs. 1,00,000 Cr for research & academic infrastructure for HE institutions by 2022.”

Towards increasing the authorized share capital of HEFA to Rs. 10,000 Crore, the Government plans to infuse additional equity of Rs. 5,000 Crore, in addition to Rs. 1,000 Crore provided earlier.

The Minister further added that “increase of budgetary allocation for education, from Rs. 65,867 Cr in 2013-14 to Rs. 1,10,000 Cr in 2018-19 (67% increase), without any raise in tuition fee is a huge push for research & academic infrastructure with social equity.”

However, contrary to the statement by the HRD Minister, the fees of IIMs and IITs, which are directly funded by the Centre has increased on multiple occasions. The IITs hiked their fee from Rs. 90,000 to Rs. 2 Lakh per year in 2016, IIMs too have been increasing their fee year on year in the range of 5-7% and at present it is around Rs. 20 Lakhs for two years.

The CCEA has also approved that the modalities for raising money from the market through Government guaranteed bonds and commercial borrowings would be decided in consultation with the Department of Economic Affairs so that the funds are mobilized at the least cost.

The five-window model for availing fund under HEFA are:

• Technical Institutions more than 10 years old: Repay the whole Principal Portion from the internally generated budgetary resources.

• Technical Institutions started between 2008 and 2014: Repay 25% of the principal portion from internal resources, and receive the grant for the balance of the Principal portion.

• Central Universities started

• prior to 2014: Repay 10% of the principal portion from internal resources, and receive the grant for the balance of the Principal portion.

• Newly established Institutions (started after 2014): for funding construction of permanent campuses: Grant would be provided for complete servicing of the loan including the Principal and interest.


This move is expected to address the needs of all educational institutions with differing financial capacity in an inclusive manner.

The government announced to establish HEFA in the Budget 2017-18 for mobilising extra-budgetary resources for building crucial infrastructure in the higher educational institutions. In the existing arrangement, the entire principle portion is repaid by the institution over ten years and the interest portion is serviced by the Government by providing additional grants to the institution. So far, funding proposals worth Rs. 2,016 crore have been approved by the HEFA.


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