The Union Cabinet on Wednesday approved a proposal to expand the scope of the Higher Education Financing Agency (HEFA) by expanding its capital base to Rs 10,000 crore from the existing Rs 1,100 crore. HEFA has also been tasked to mobilise Rs 1,00,000 crore for Revitalising Infrastructure and Systems in Higher Education (RISE) by 2022.
The cabinet committee on economic affairs (CCEA), at a meeting chaired by Prime Minister Narendra Modi, approved the proposal to expand the facility (HEFA) to all institutions, especially those set up after 2014, central universities with few internal resources, and school or health education institutions such as the All India Institute of Medical Sciences (AIIMS) and the Kendriya Vidyalayas (KVs).
HEFA was set up on May 31, 2017, as a non-profit, non-banking financing company to mobilise extra-budgetary resources for building crucial infrastructure in higher educational institutions under the government.
So far, institutions have been receiving grant-in aid. Under this, funds will be allocated on a project basis. “Institutions will have to send proposals on where they want to spend the money and they’d get interest-free loans,” a person familiar with the plan said on the condition of anonymity.
Human resource development minister Prakash Javadekar called it a ‘landmark decision.’ “This substantial allocation for research and academic infrastructure will help India compete in the world stage,” he tweeted.
For the first time, he said, the Jawahar Navodaya Vidyalayas KVs will also be funded by the HEFA, in addition to the Indian Institutes of Technology, National Institutes of Technology, Indian Institutes of Science Education and Research, and central universities and colleges already under its purview.
People familiar with the plan said there would be five financing windows. For instance, technical institutions more than 10 years old will have to repay the whole principal portion from internally generated budgetary resources.
Technical institutions that started between 2008 and 2014 will repay 25%, and receive a grant for the balance of principal portion.
Central universities started prior to 2014 will have to repay 10% of the principal portion from internal resources, and receive a grant for the balance. In the case of newly established institutions (after 2014), for funding construction of permanent campuses, grants would be provided for the complete servicing of the loan.
The approval is to enhance the authorised share capital of HEFA to Rs 10,000 crore and provision of additional government equity of Rs 5,000 crore. The procedures 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.
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