Govt bid to raise ₹17,000 crore to fund higher education hits hurdles
Funding agencies, including PFC, LIC, HUDCO and NABARD have expressed their limitations in helping HEFA raise the funds
New Delhi: The government’s plan to raise Rs17,000 crore for higher education funding has hit a road block.
Representatives of the departments of economic affairs, ministry of human resource development (MHRD), and the Higher Education Funding Agency (HEFA) held a meeting with funding bodies with the aim of raising the funds.
However, funding agencies, including the Power Finance Corporation Ltd (PFC), the Life Insurance Corporation of India (LIC), the Housing and Urban Development Corporation Ltd (HUDCO), and the National Bank for Agriculture and Rural Development (NABARD) have expressed their limitations in helping HEFA raise the funds, according to at least two government officials who spoke on the condition of anonymity and minutes of the meeting, a copy of which has been seen by Mint.
PFC and NABARD reasoned that they are stretched financially as they are busy handling other key government projects. LIC said internal regulations prevent it from helping HEFA directly in funding or raising funds for it. HUDCO expressed its inability to help as it is involved with the Pradhan Mantri Awas Yojana, the central government scheme that aims to provide housing subsidy to low and middle income families.
Separate emails sent to NABARD and LIC on Friday seeking their response did not elicit any response. Phone calls and messages to PFC chairman’s mobile number remained unanswered. An email sent to HUDCO on Tuesday also did not elicit any response.
An MHRD spokesperson said she does not have any knowledge of the development, though MHRD is the nodal ministry for HEFA, a non-banking financial corporation that is tasked to raise money from the market to fund education infrastructure and research requirements of state-funded educational institutions.
The government looks to raise Rs17,000 crore initially via HEFA as extra budgetary resources (EBR), according to the minutes of the meeting. Of this, Rs12,000 crore is for higher education, Rs1,000 crore for school education and the remaining Rs4,000 crore for medical education.
The inability of the four funding bodies to help raise the funds may impact the planned EBR mobilisation for educational institutions at a time that HEFA has already approved nearly Rs11,000 crore of loans to several higher educational institutions, including the Indian Institutes of Technology (IITs) ahead of garnering enough capital.
Last month the union cabinet had approved a proposal to raise Rs1 trillion via HEFA for education funding over the next four years. To raise this money, HEFA will have a capital base of Rs10,000 crore . Of the Rs.10,000 crore capital base of HEFA, Rs6,000 crore will be given by the government and Rs600 crore by the HEFA joint venture partner Canara Bank. The remaining Rs3,400 crore will be raised from corporate houses by pledging a portion of the equity of HEFA. As a first attempt, HEFA was looking to raise Rs. 17,000 crore from the market.
“Raising funds from the market is a tough task and we have faced the first hurdle. Negotiations are still on with at least one of the four organisations,” said one of the two officials cited above.
The second official said that though LIC has already expressed its limitations, the government has asked the insurance firm to come up with an alternative plan.
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