Budget 2018: New funding mechanism for infrastructural development in higher education

Budget 2018

Centrally funded institutions (CFIs) such as IITs, IIMs, NITs, IIITs and central universities will no longer receive budget grants for expanding and building new infrastructure. Instead, all infrastructure financing will be moved to the Higher Education Funding Agency (HEFA), which was set up by the government last year to mobilise funds from the market and offer 10-year loans to CFIs.


According to sources…

  1. The government, on an average, was giving Rs 10,000 crore every year to all CFIs in higher education for infrastructure development.
  2. The new funding model is called Revitalising Infrastructure and Systems in Education or RISE
  3. Under this new model, the central universities and institutes will be able to borrow up to Rs 1,00,000 crore in the next four years.
  4. In terms of funds availability, it is a 250% jump
  5. The idea is to move away from lump sum grants to outcome-based approach and project-based funding.
  6. RISE will remove financial constraints imposed by budget availability and bring in greater accountability on part of the educational institutions


— Loans taken through the RISE initiative will be paid back over 10 years. There will be different modes of loan repayment for different institutions based on their internal revenues.

For instance, central universities will be eligible to borrow through the 90:10 window, which means that they will have to pitch in 10% of the actual principal amount to be repaid. The remaining principal amount and the interest accrued on the loan will be paid by the government to HEFA.

— IITs and IIMs, on the other hand, will have to avail loans through the 75:25 window. In other words, they will have to give 25% of the principal amount. The balance principle and loan interest will be taken care of by the central government.

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