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The Economics of Higher Education in India
by Dr. Padmapriya S Bookmark and Share

The World Bank defines Tertiary education (further education plus higher education) as including universities and institutions that teach specific capacities of higher learning such as colleges, technical training institutes, community colleges, nursing schools, research laboratories, centres of excellence and distance learning centres. Tertiary education at non-degree level is known as further education. In India, as is the prevalent custom in many other countries, the term ‘Higher education’ does not include further education. Higher education also known as post-secondary education include undergraduate and postgraduate education, which culminates in the awarding of a degree. Higher education does not include vocational education.

India is a highly populous country of over 1.3 billion people. India with 356 million young people in 2014 {United Nations Report, 2014} is the country with the world’s largest youth population. The population in the age group of 15 years to 34 years increased to 430 million in 2011 according to the National Statistical Commission Report on Youth of India published in 2017. India's higher education system is the third largest in the world, next to the United States and China. Education being an essential part of Human Development is crucial to ensuring the continuous development of our nation in all fields because the scholars of today are the future job creators and job seekers in their respective fields. The success of a nation depends to a large extent on the success of the education system of the nation; specifically the higher education system. The Higher Education of a nation is an essential aspect of Human Capital formation and also has a great bearing on the employability of the youth of a nation. 

The main governing body at the tertiary level is the UGC. The University Grants Commission (UGC), a statutory body set up by the Indian Union government in accordance to the UGC Act 1956 under Ministry of Human Resource Development, is charged with coordination, determination and maintenance of standards of higher education. It provides recognition to universities and colleges in India, and disburses funds to them.  As of 2016, India has 44 central universities, 540 state universities, 122 deemed universities, 90 private universities, 5 institutions established and functioning under the State Act and 75 Institutes of National Importance including AIIMS’, IITS, IIEST and NIT’S – a total of 799 universities. Other institutions include 39,071 colleges as Government Degree Colleges and Private Degree Colleges, which includes 1800 exclusive women's colleges, functioning under these universities and institutions as reported by the UGC in 2016. Universities in India have evolved in divergent streams with each stream monitored by an apex body, indirectly controlled by the Ministry of Human Resource Development and funded jointly by the state governments. Most universities are administered by the States, however, there are important universities called Central Universities, which are maintained by the Union Government. Thus, the increased funding of the central universities gives them an advantage over their state competitors.

Several hundred state universities and research institutions provide opportunities for advanced learning and research leading up to a PhD in branches of science, technology and agriculture. 25 of these institutions come under the umbrella of the CSIR - Council of Scientific and Industrial Research and over 60 come under the ICAR - Indian Council of Agricultural Research. In addition, the DAE - Department of Atomic Energy, and other ministries support various research laboratories. The National Institute of Technology (NITs), Indian Institutes of Information Technology (IIITs), Indian Institutes of Technology and the Indian Institute of Science are the most prestigious institutions in the fields of science and technology. 

The private sector is vibrant and strong in the field of higher education in India and it contribution is undeniable and exceptional. The Competition between the government and private players in the field of higher education has led to improved quality in the field of higher education and the incorporation of the best practices of the education sector.

The total allocation for higher education in the budget 2013-14 was a little over Rs.16,000 crores, which includes technical education. In terms of Central Budgetary Allocation, the department of Higher Education was allotted Rs 25,399 crores for the year 2015-16 while it was Rs 28,840 crores for the year 2016-17. Also, the Finance Ministry announced the creation of a Higher Education Financing Agency, with an initial capital base of Rs.1000 crores, which will leverage funds from the market and work to create infrastructure in India’s top institution like IIT’s. Budget 2020 has allocated Rs 39, 466.52 crores for Department of Higher Education. Thus, there has been a reasonable increase in the budgetary allocation for higher education in India. Thus, over the years, more funds have been allocated to the education sector. It is extremely important to use the funds in an intelligent manner by concentrating on technology enabled education, research and to teach skills to the youth in a manner suitable to improving their employability and productivity. Higher education must include soft skills’ training for the youth. Emphasis should be on access, equity and quality of higher education.

The youth of today is the future for the country. Higher Education in India is of high strategic importance to the development of India and investments in the same will lead to multiple benefits, both direct and indirect to the economy, polity and social structure of the country.

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