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 Budget proposal for NTA stirs up a hornet's nest

By Rajiv Shukla
Finance Minister's budget proposal to create a National Testing Agency (NTA) and the subsequent announcements by Higher Education Minister Prakash Javadekar on February 5 have triggered off apprehensions in the higher education sector -- lurking fears that reforms may do more harm than good to the sector.

The first to react to these fears were the Indian Institutes of Technology (IIT) professors who said, in a hushed tone, that they will continue with their (Joint Entrance Exam) Advanced to pick students for admission to the IITs. The Indian Institutes of Management (IIMs) too are planning to tell the HRD minister that handing over Common Admission Test to a newly created agency would dilute its quality and credibility.

An outspoken IIT-Kanpur professor who refused to be named said that his contention has the legal backing of 13-judge Supreme Court judgement in TMA Pai Foundation case which even the United Progressive Alliance in 2013 couldn't overrule. He said that in 2013 the IITs retained the power to hold entrance test for undergraduate programmes within their jurisdiction.

The HRD ministry then wanted to hold a common entrance test for all engineering colleges but had to tweak its plan, succumbing to the IITs' protest.

The ministry then agreed to hold the Joint Entrance Test (JEE) in two parts - JEE-Main and JEE-advance - with the second test to be held by the IITs for filling their seats and the first by the Central Board Secondary Education (CBSE) for admission to other centrally funded technical institutes.

The IIMs too have the case on their side. The TMA Pai Foundation case and the subsequent related cases have time and again asserted the institutions' right to hold their own common admission test and to pick students from its merit list.

The talk about NTA have been doing the rounds for nearly two years but it is only now that a formal proposal has come up from the government. Once approved, the proposal will take at least two years to materialise and till then the status quo will have to continue. This was confirmed by the HRD minister himself at the February 5 press conference.

However the most serious apprehensions about the proposed NTA are about its security setup and procedural delays. The agency would be a government agency and it would naturally be prone to all the security lapses that such an agency normally has. The UPSC and the state recruiting and testing agencies have not left an impressive image. The more powerful the agency the more prone to corruption it would be. The AICTE and the MCI record too have not been above board in this regard.

Cabinet okays Higher Edu Finance Agency

By Sanjeev Dube
On September 12, 2016 the Union Cabinet, chaired by Prime Minister Narendra Modi, gave its nod to a proposal of the HRD ministry for creation of Higher Education Financing Agency (HEFA). The HEFA would provide the much needed funds to boost research oriented infrastructure for premiere institutions like IITs, NITs and IIMs.

Speaking to reporters soon after the cabinet meeting HRD minister Prakash Javadekar said HEFA would be jointly promoted by the identified promoter and HRD ministry with an authorised capital of Rs 2,000 crore of which government equity would be Rs 1,000 crore.

The HEFA would be formed as a SPV within a PSU Bank/ Government-owned-NBFC (Promoter) and it would leverage the equity to raise up to Rs 20,000 crore for funding projects for infrastructure and development of world class labs in institutions like IITs, IIMs and NITs etc, Javadekar said.

The HEFA would also mobilise CSR funds from PSUs and Corporates, which would in turn be released for promoting research and innovation in these institutions on grant basis, a statement released by the ministry said.

HEFA would finance the civil and lab infrastructure projects through a 10-year loan, the statement said, adding that principal portion of the loan will be repaid through the 'internal accruals' (earned through the fee receipts, research earnings etc) of the institutions.

The Government would service the interest portion through the regular Plan assistance. All the Centrally Funded Higher Educational Institutions would be eligible for joining as members of the HEFA.

When asked how HEFA would raise funds, officials said that it could be through bond market by floating education bonds or through debt market.

For joining as members, the Institution should agree to escrow a specific amount from their internal accruals to HEFA for a period of 10 years. This secured future flows would be securitised by the HEFA for mobilising the funds from the market.

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 statement said.

The HRD minister also said that he is planning to introduce target-based bonuses and penalties for educational institutions like it is done in the case of roads and highways.

"If a project is completed before time, we will provide a bonus and if it is not completed as per schedule, there can be a penalty for the concerned entity," Javadekar said.

Asked if the creation of HEFA would also have an impact on funds allotted to premiere educational institutions during budget, Javadekar said that this initiative does not mean that budget funds would get reduced.

Responding to questions, he also said that this also should not be viewed as a proposal to increase fees.

He said institutions like IISERs require more funds than what they generate from fees and HEFA funds will help them.

There is a several year backlog in terms of infrastructure, which will be met, the HRD minister said.

These institutes can return the principal sum from their earnings from activities like research and consultancy, while the government can take care of the interest part, he said.

Officials said that two Public Sector Banks have shown interest in becoming a partner in HEFA SPV and a decision will soon be taken in this regard.

The HEFA Board will be chaired by Secretary, Higher Education in the HRD ministry, a source said, adding that managing funds would be left to banking and finance professionals.


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