The National Knowledge Commission (NKC), constituted by the Union government in June 2005 under the chairmanship of Satyen (‘Sam’) Pitroda, has made several recommendations to the Congress-led UPA government for reform of higher education. In its Report to the Nation, presented to prime minister Manmohan Singh on January 12, 2007, NKC suggested ways and means for government supported universities and colleges to raise additional resources for accelerated institutional growth and development. Excerpts (verbatim):
Government support. There is no system of higher education in the world that is not based upon significant public outlays. And government financing will remain the cornerstone of any strategy to improve our system of higher education. The present support for higher education, at 0.7 percent of GDP, is simply not adequate… In an ideal world, government support for higher education should be at least 1.5 percent, if not 2 percent of GDP, from a total of 6 percent of GDP for education... Therefore, it is essential to explore a wide range of possibilities which can be complements to the increase in public expenditure.
Better assets management. Most public universities are sitting on a large reservoir of untapped resources in the form of land. In effect, with some imagination, many of our universities can be converted into institutions that are similar to land grant universities. Each university should thus have an innovative assets management plan… It should be possible to draw up norms and parameters for universities to use their land as a source of finance.
Rationalisation of fees. On average, fees constitute less than 10 percent of total expenditure in our universities. And, in most universities, fees have remained unchanged for decades. In theory, universities have the freedom to decide on fees. In practice, however, universities have not exercised this freedom in part because of some genuine concerns about access but in larger part because of the rhetoric and populism in the political process. The problem has been compounded by the UGC method of providing grants-in-aid to bridge the difference between income and expenditure… The low fees in public universities, without any means test, have meant unquantifiable benefits for unintended beneficiaries…
The time has come to rethink, as we have no choice but to rationalize fees. It is for universities to decide the level of fees but, as a norm, fees should meet at least 20 percent of the total expenditure in universities...
Philanthropic contributions. It is clear that we have not exploited this potential. In fact, the proportion of such contributions in total expenditure on higher education has declined from more than 12 percent in the 1950s to less than 3 percent in the 1990s. It should be possible to nurture this tradition of philanthropy through changes in incentives for universities and for donors. In the present system, there is an explicit disincentive. If universities mobilize resources from elsewhere, they are in effect penalised through a matching deduction in their grant-in-aid. What we need to do is exactly the opposite.
Universities which mobilize resources through contributions should be rewarded with matching grants-in-aid. At present, there is also an implicit disincentive in both lax laws and trust laws... These laws should be changed so that universities can invest in financial instruments of their choice and use the income from their endowments to build up a corpus.
Other sources. Obviously, universities must not be driven by commercial considerations. But it would be both prudent and wise to tap other sources such as alumni contributions, licensing fees, or user charges (for facilities in universities used by people from outside).
We need to create supportive institutional mechanisms that allow universities to engage professional firms for this purpose. Mobilising resources, even from former students, is a task that needs specialised talents and experience…