‘Conscious’ decision to separate funding from regulator: government officials on higher education reform

India's higher education landscape is undergoing a significant transformation, marked by a 'conscious decision' from the government to separate the funding mechanisms from the regulatory functions of its higher education bodies. This move, directly in line with the recommendations of the National Education Policy (NEP) 2020, aims to address long-standing issues of conflict of interest and enhance the efficiency and transparency of the system.

Historically, the University Grants Commission (UGC), established in 1956 under the UGC Act, 1956, served a dual role: it was both the primary funding agency for universities and a key regulator overseeing standards. This dual mandate, while initially intended to foster growth and maintain quality, often led to a perceived conflict of interest. Institutions receiving grants were simultaneously being regulated by the same body, raising questions about impartiality in evaluations and the potential for a 'grant-giving' body to overlook deficiencies in institutions it was funding. This structure was criticized for fostering a compliance-driven rather than an outcome-driven approach to quality assurance, and for hindering innovation and academic autonomy.

What has now happened is a fundamental restructuring. The grant-giving power will unequivocally reside with the Ministry of Education. While the Ministry will control the purse strings, the regulatory reports generated by the higher education regulator will become a 'major factor' in deciding the amount of funding an institution receives. This means that an institution's adherence to quality standards, academic performance, and overall governance, as assessed by the independent regulator, will directly influence its financial support. The NEP 2020 envisions a 'light but tight' regulatory framework, replacing multiple regulators with a single Higher Education Commission of India (HECI), which would have four independent verticals: the National Higher Education Regulatory Council (NHERC) for regulation, the National Accreditation Council (NAC) for accreditation, the Higher Education Grants Council (HEGC) for funding (though this is now being shifted to the Ministry), and the General Education Council (GEC) for academic standards.

Key stakeholders in this reform include the Ministry of Education, which now assumes direct responsibility for financial allocations to higher education institutions. The proposed HECI, or its regulatory vertical, will be the independent regulator, focusing solely on setting standards, ensuring compliance, and assessing performance. Higher education institutions – comprising thousands of universities and colleges across India – are direct beneficiaries (or subjects) of this change. Students stand to benefit from improved quality and accountability, while faculty members may experience a shift towards more performance-based funding and a clearer focus on academic excellence. The move also involves state governments, as education falls under the Concurrent List of the Seventh Schedule of the Indian Constitution (Entry 25), meaning both central and state governments have legislative powers over it. Therefore, successful implementation requires coordination and buy-in from states.

This reform matters immensely for India's future. With the world's largest youth population, harnessing the demographic dividend hinges critically on a robust, high-quality higher education system. Separating funding from regulation is expected to bring greater transparency and accountability, pushing institutions to genuinely improve quality rather than just meet compliance requirements. This could lead to better research outcomes, enhanced innovation, and graduates who are more industry-ready, thereby boosting India's economic competitiveness. The autonomy of the regulator, free from the pressure of fund disbursement, is crucial for impartial assessments and fostering a culture of meritocracy. It also aligns with global best practices in educational governance, where regulatory bodies often operate independently of funding agencies to ensure objectivity.

From a constitutional perspective, while there isn't a direct article mandating this separation, the reform aligns with the broader principles of good governance and administrative efficiency. Education is a fundamental aspect of the Directive Principles of State Policy (DPSP), particularly Article 41 (Right to work, to education and to public assistance in certain cases) and Article 45 (Provision for early childhood care and education to children below the age of six years), which underscore the state's responsibility in promoting education. The proposed HECI Bill, once enacted, will replace the UGC Act, 1956, and provide the legal framework for this new structure. This legislative overhaul is essential to give statutory backing to the 'conscious decision' and ensure its long-term viability and impact.

Looking ahead, the future implications are profound. If implemented effectively, this reform could usher in an era of enhanced quality, research focus, and greater accountability in Indian higher education. Institutions that genuinely excel will likely attract more funding, fostering healthy competition. However, challenges remain, including ensuring the true independence of the regulatory body from political interference, developing robust and transparent mechanisms for regulatory assessment, and ensuring equitable distribution of funds, especially to institutions in remote areas or those catering to marginalized sections. The success will depend on the clarity of policies, the robustness of the new regulatory body, and the commitment of all stakeholders to prioritize educational excellence over bureaucratic hurdles. This structural shift is a critical step towards realizing the vision of NEP 2020 for a globally competitive Indian education system.