Govt to set up funding agency for research

NEW DELHI: The government will set up a Higher Education Financing Agency, promoted by the HRD ministry and private firms with a capital of `2,000 crore, to create quality infrastructure and promote research in premier academic institutions.

The proposal to set up HEFA was approved on Tuesday at a cabinet meeting chaired by PM Narendra Modi. An HRD ministry statement said HEFA would mobilise corporate social responsibility funds from public and private sector companies for promoting research and innovation in NITs, IITs, and IIMs.

“HEFA would finance the civil and lab infrastructure projects through a 10-year loan. The principal portion of the loan will be repaid through the ‘internal accruals’ (earned through the fee receipts, research earnings, etc.) of the institutions,” it said.

However, HRD minister Prakash Javadekar said there would not be any fee hike by the institutions to enable them to repay the loan. Of the `2000 crore capital, the government equity will be `1,000 crore.

“There is a several-year backlog in terms of infrastructure, which will be met though this agency,” said Javadekar. Asked if the creation of HEFA would have an adverse impact on funds allocation to educational institutions, he said budget funds would not be reduced.

To become a member, an institution should agree to open an escrow account with a specific amount from their internal accruals with HEFA for 10 years. The secured future flow from the account would be securitised by the HEFA for mobilising funds from the market.

Officials said funds could also be raised using bond market by floating education bonds.

Each member institution would be eligible for a credit limit as decided by HEFA based on the amount agreed to be escrowed from the internal accruals.

The Modi cabinet also cleared a scheme for low-income states, hill states, the Northeast, and Andaman and Nicobar Islands which will help them raise the quality of their educational institutions. Called the Technical Education Quality Improvement-Programme (TEQIP), phase 3 of the project has an outlay of `3,600 crore. The project includes measures to improve teaching methods, create better infrastructure, use information technology and fill vacant posts.

The project would be initiated with a budget of `2,660 crore, with the possibility of additional financing of `940 crore later. The initial central share will be `1,330 crore. External aid of `1,330 crore from the World Bank will be added to it.

OF THE PROPOSED `2,000 CRORE CAPITAL FOR THE AGENCY, THE GOVERNMENT EQUITY WILL BE `1,000 CRORE