The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved a proposal for expanding the scope of Higher Education Financing Agency (HEFA) by expanding its capital base to Rs 10,000 crore.
The CCEA also tasked the HEFA to mobilise Rs 1 lakh crore for Revitalising Infrastructure and Systems in Higher Education (RISE) by 2022.
The CCEA, chaired by Prime Minister Narendra Modi, approved the proposal to expand this facility to all institutions, especially those set up after 2014, Central Universities which have very little internal resources and the school education or health education infrastructure like AIIMS and Kendriya Vidyalayas.
The CCEA has approved five windows for financing under HEFA and the modalities of repaying the principal portion of the fund (interest continues to be serviced through government grants in all these cases).
HEFA was set up on May 31, 2017, by the Central government as a Non Profit, Non-Banking Financing Company (NBFC) for mobilising extra-budgetary resources for building crucial infrastructure in the higher educational institutions under the Central government.
According to a statement, the CCEA 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 mobilised at the least cost.
"This would enable addressing the needs of all educational institutions with differing financial capacity in an inclusive manner," the statement said.
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.
The move is a small part of the Centre's vision for a revitalised higher-education sector in India. Last week, the government announced it was scrapping the University Grants Commission (UGC) and the All India Council for Technical Education (AICTE) in favour of a single body that would oversee higher education. It is expected to open the window for foreign investment in higher education, putting India on par with the USA, UK and Canada when it comes to undergraduate and postgraduate courses.