Shift from grants to loans for infrastructure has IITs worried, matter to raised during meet with President

As first reported by The Indian Express on February 26, a quarter of the loans on offer, that is roughly Rs 25,000 crore will be set aside exclusively for the 23 IITs. However, the complete shift from grants assistance to loans has prompted the older IITs to express concern that the move could hurt their financial position.

Some of them are now planning to raise the issue at the upcoming meeting with the President this week, said an IIT director on condition of anonymity. President Ram Nath Kovind will meet heads of all IITs, NITs and IISERs on Tuesday in his capacity as the Visitor of all centrally-funded technical institutions.

As a first step in the direction of moving away from grant-in-aid model for capital development, the government cut its budget assistance for the IITs by almost 20 per cent, from Rs 6,326 crore (budget estimate) last year to Rs 7,856 crore (budget estimate) this year.

The concerns regarding RISE are limited to the older IITs as they, unlike the technical institutes set up between 2008 and 2014, will have to repay the whole principal amount over ten years. The interest will be taken care of by the government. The younger institutions, on the other hand, will have to repay 25 per cent of the principal amount. The balance principal and loan interest will be paid by the government.

“There are primarily three sources of income generation for an educational institution — research projects, tuition fee and alumni endowments. The problem with research funding in India is that the overhead expenditure is not paid separately to the institute. So, we don’t end up earning much from these projects,” said another IIT director, who also did not wish to be named.

“Alumni philanthropy hasn’t really picked up in India. As for tuition fee, education in the IITs is highly subsidised. That isn’t enough to generate adequate revenues to pay off loans that may run into crores,” he added.

“We don’t have a problem with the initiative, but we do want clear commitments from the government with regard to our recurring expenditure,” said the director of another IIT.

The government, however, feels the concerns are misplaced. “Some of the old IITs generate an annual revenue of up to Rs 40 crore. Under RISE, they can borrow up to 10 times the amount they escrow. The government is committed to continue funding the running expenses of all institutes such as salaries. So there is no question of the loans hurting them financially,” said a source.