The Cabinet Committee on Economic Affairs chaired by Prime Minister Shri Narendra Modi has approved the proposal for expanding the scope of Higher Education Financing Agency (HEFA) by enhancing its capital base to Rs. 10,000 crore and tasking it to mobilize Rs. 1,00,000 crore for Revitalizing Infrastructure and Systems in Education (RISE) by 2022.
In order to expand this facility to all institutions, especially to the institutions set up after 2014, Central Universities which have very little internal resources, and the school education/health education infrastructure like AllMSs, Kendriya Vidyalayas, the CCEA has approved the following five windows for financing under HEFA and the modalities of repaying the Principal portion of the fund (interest continues to be serviced through Government grants in all these cases.
Technical Institutions more than 10 years old: Repay the whole Principal Portion from the internally generated budgetary resources.
Technical Institutions started between 2008 and 2014: Repay 25% of the principal portion from internal resources, and receive the grant for the balance of the Principal portion.
Prior to 2014: Repay 10% of the principal portion from internal resources, and receive the grant for the balance of the Principal portion.
Newly established Institutions (started after 2014): for funding construction of permanent campuses: Grant would be provided for complete servicing of the loan including the Principal and interest.
Other educational institutions and grant-in-aid institutions of Ministry of Health: All the newly set up AIIMSs and other health institutions, the Kendriya Vidyalayas / Navodaya Vidyalayas would be funded and the Department/Ministry concerned will give a commitment for complete servicing of the principal and interest by ensuring adequate grants to the institution.
HEFA has been set up on 31st May 2017 by the Central Government as a Non Profit, Non-Banking Financing Company (NBFC) for mobilizing extra-budgetary resources for building crucial infrastructure in the higher educational institutions under Central Govt. In the existing arrangement, the entire principle portion is repaid by the institution over ten years, and the interest portion is serviced by the Government by providing additional grants to the institution. So far, funding proposals worth Rs. 2,016 crore have been approved by the HEFA.
What is RISE scheme all about?
Under RISE, all centrally-funded institutes (CFIs), including central universities, IITs, IIMs, NITs, and IISERs, can borrow from a Rs 1,00,000 crore corpus over the next four years to expand and build new infrastructure. The initiative aims to step up investments in research and related infrastructure in premier educational institutions, including health institutions.
Higher Education Financing Agency (HEFA) would be suitably structured for funding this initiative. The manner in which investment in institutions is provided is likely to be the same as is practiced in HEFA, but there may be different windows for different institutions.
The Union Cabinet had approved HEFA in September 2016 as a Special Purpose Vehicle with a public sector bank (Canara Bank). It would be jointly funded by the promoter/bank and the MHRD with an authorized capital of ₹2,000 crore. The government equity would be ₹1,000 crore.
HEFA will leverage the equity to raise up to ₹20,000 crore for the funding of world-class infrastructure at the IITs, IIMs, the National Institutes of Technology (NITs) and such other institutions. The agency will also mobilize Corporate Social Responsibility (CSR) funds from public sector units (PSUs) and corporates. These would be released as grants to eligible institutions for promoting research and innovation.
The significance of HEFA: Funding from HEFA is expected to boost infrastructure, especially state-of-the-art laboratories, in key institutions such as the Indian Institutes of Technology (IITs), the Indian Institutes of Management (IIMs), and the Indian Institutes of Information Technology (IIITs).