With the finance ministry refusing to budge from its stand that the Nalanda University project will have to be governed and managed by the same oversight rules as other government-aided bodies, the Union Cabinet will have to take a political call on granting full financial independence to the institution.
While the Ministry of External Affairs and the university have argued that such scrutiny will dilute the autonomous character intended for the international university, North Block maintains that, as of now, the university is funded by the Indian government and rules applicable here have to be followed.
The first objection to the project came from the Department of Economic Affairs in the finance ministry, which queried a provision in the Nalanda (Amendment) Act Bill 2013, where it was stated that the “the Government of India may meet both capital and recurring expenditure of the university to the extent required”.
The DEA said this amendment “creates an open-ended liability” for the government and should be amended to “may provide grants-in-aid to the university to meet its capital and recurring expenditure”.
This opened up a set of unexpected complications as grants-in-aid necessitate a level of government control and will require the university to have terms and condition of employment that are similar to Central government employees. This will also make reservations mandatory. The IITs are a good example of institutions governed by grants-in-aid rules.
Accepting these norms would impact current tax-free salary structures of the vice-chancellor, dean and those proposed for faculty members. These salaries are in the range of $50,000-$80,000.
To make matters worse, the Department of Expenditure has questioned granting such autonomy, equivalent to ministries of the government, without its approval. It has argued that since the university is “substantially funded” by the government, it will have to follow all government financial rules.
By the same logic, it has argued that as long as the government is funding the project, the university cannot have the freedom to borrow funds without the prior approval of the Centre. One of the provisions allows the university to raises funds on its own and financial commitments by other countries are expected at a later stage.
However, according to the MEA, complying with what is called general finance rules will bring the university closer to the financial regime of Central universities. Chancellor and head of the governing body of the university, known earlier as the Nalanda Mentor Group, Amartya Sen, has opposed this and argued that the regulations that would govern Nalanda University should be appropriate for an “international university”.
He has also argued that the Nalanda Act of 2010 describes Nalanda University as an “international continued…