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Insights into Editorial: Should we do away with subsidies for higher education?

Insights into Editorial: Should we do away with subsidies for higher education?


Recently, the proposed fees hike of residential hostels in Jawaharlal Nehru University (JNU) has sparked a widespread protest and controversy over subsidies in higher education.

Almost more than a fifth of the population is below official poverty limits and 93% of the workforce is engaged in unorganised sector, subsidized education provides access to quality education to the poor.

Subsidies in education generates a host of positive externalities such as health improvement, reduction in poverty, crime and population growth.

It directly or indirectly influences almost all facets of social life, and therefore should be viewed as a non-negotiable public good and by far the most potent social investment.


Importance of Public Education:

  • The importance of public education is to ensure that all members of society have a basic set of skills (reading, writing, math, basic social interactions, ability to create and interpret directions and directives, etc.) as well as to ensure that people are able to maintain a basic ability to learn, regardless of social status or wealth. For the rich, education has always been accessible.
  • They can afford to pay for education, they can afford to not have children working, etc. But for the lower and middle classes, education has been a pipe dream for most of documented history.
  • To understand purpose of education, we need to broaden our understanding of intelligence, meritocracy and success.
  • Taking action is more important than just acquiring information.
  • It should be equally available to all the citizens.
  • Inclusiveness and equity are important traits of a good public education.
  • It is also about people coming together to further the public good through education i.e., it is for the public good.


India in Public Education spending in recent past:

Growth in national income did not result in an increase of public expenditure for education as a whole. It kind of stagnated.

Within the education sector as a whole, there was a shift in the focus of funding in the 1990s from higher education to primary education.

In 1992, there was this social safety net that came along that with the structural adjustments and all the agreements that the Finance Minister signed with the IMF and so on.

This readjustment happened in terms of public spending, this stagnation in public expenditure for higher education has really killed.

There is a major reduction in the effort to uphold the minimum acceptable levels of quality of education particularly in State institutions.

The post-liberalisation [period] has affected much more severely the State institutions. Everybody has been affected.


Subsidies in Higher Education:

Inclusiveness and equity are very important characteristics of a good public institution. And, over the years, this has actually increased in public institutions and that is entirely because of subsidy.

The subsidized education plays a significant role in building an economy as in the case of India.

Students engaged with research and specialised education go on to become better contributors to the economy. Higher education boosts innovation, creative thinking and innovations.


Providing the subsidies to the needy will yield best results:

According to study conducted by Gokhale Institute, benefits can be skewed in the absence of regulation. Therefore, eliminating free riders is the biggest challenge in dissemination of subsidies.

Technological improvement like Aadhar, direct benefit transfer can be used to eliminate inclusion and exclusion errors.

Rationalisation of fee structure according to the demand of programmes based on marketability, affordability and input cost and according to different income groups could pave the way for optimal utilization of subsidies.

A proper regulatory mechanism should be placed in order to make private institutions in line with the government’s goal of making higher education accessible and affordable to vulnerable section.


Differences in Spending for various fields:

  • Student subsidies for premier institutions like the IITs and engineering colleges are incomparably higher than those for universities and colleges, particularly for liberal arts institutions.
  • Similarly, there are major disparities in allocation of funds per student in Central universities and State universities, and between colleges in the metropolises and those in the mofussil towns, between mainstream and distance education.
  • In some of the well-known universities, it is the correspondence courses and the revenues that are generated out of them that are cross-subsidising the other programmes.
  • There is considerable divergence across public institutions in higher education in the proportion of revenue from students as a total of the operational expenditure.
  • There are States with a controlled fee, at the same time, many State universities are in a predicament where their salaries and pension liabilities constitute something like three-fourths or four-fifths of their expenditure.



Creating free public education is one way to allow people the tools to escape poverty, and work to improve the basic skills that they will use throughout their lives. IF it’s done properly.

If schools are given the resources, they need to meaningfully impact their students lives, and are given the resources to help the students who lack these basic skills.

We need to redefine them so as to help our students meet changing needs of society and thrive in the exciting new world of possibilities.

We need to recognize that there are multiple intelligences and intellectual intelligence is just one of them.

Moral intelligence is just as important as intelligence of the mind. Altruistic intelligence can be more important than logical intelligence.

Therefore, we need to develop the student in a holistic and balanced way.

They must know how to research and create knowledge and apply them in unfamiliar settings, including the new spaces of a fast-changing digital economy.