New Delhi: The Higher Education Financing Agency (HEFA), a central outfit meant to grant interest-free loans to higher education institutions and raise money from the market, seems to have lost its sheen, four years after it was created.
In Budget 2021 Monday, Finance Minister Nirmala Sitharaman nearly ended funding to the agency, allocating it a token amount of Rs 1 crore, down 99.9 per cent from Rs 2,200 crore in the previous fiscal.
HEFA was announced by the late FM Arun Jaitley in his 2016 budget speech. Incorporated in 2017, it aims to mobilise Rs 1 lakh crore until 2022 from the market and offer loans to central educational institutions (CEIs) for infrastructure projects.
However, the Ministry of Finance in its review last year found the agency has not been able to raise funds.
According to an Economic Times report, it said HEFA was not able to fulfill its mandate of leveraging government equity and raising money. It had only raised commercial loans from the State Bank of India worth Rs 2,000 crore, at 8.5 per cent interest — effectively “charging interest from the government on the equity provided by it”.
The finance ministry then asked new institutions to not take loans from HEFA. Following this, the Ministry of Education is again shifting to grants for infrastructure development of institutes.
Speaking to ThePrint about the budget cut, an official in the Ministry of Education said the allocation to HEFA is in line with the “government equity to the agency”.
The agency has not been given any budget this year due to its inability to leverage the government equity, the official said, adding that the projects that have already received funding from HEFA will not suffer, but there will be no equity for new institutions.
ThePrint reached Higher Education Secretary Amit Khare, who is also the chairman of HEFA’s board of directors, but there was no response until the time of publishing this report.
‘Equity not fully leveraged’
Projects under HEFA have been divided into five windows — 1, 2 and 3 for older institutions, 4 for newly established institutions and 5 for institutions set up under the Ministry of Health and Family Welfare.
“Till now the government has already given Rs 4,812.50 crore as equity to HEFA. It has not fully leveraged the government equity already given. The agency has more than enough equity with them to leverage, and provide loans to various institutions,” said the ministry official quoted above.
The official added the government is now moving towards grants for infrastructure development.
“As funding through HEFA under window 4 and window 5 have been closed, no more equity is required for HEFA for funding the various projects. Funds requirement of window 4 and window 5 will now be directly met from the government grants,” the official said.
“HEFA funding to various institutions under window 1, window 2, and window 3 will not suffer at all. HEFA is having enough resources with them to meet the current demand of funds. So no HEFA equity is required for this year. Just a token of Rs 1 crore has been kept,” he added.
‘Disappointed’ by the move
Education institutions, however, are not happy with the government’s approach.
A director of one of the older Indian Institutes of Technology (IITs), who spoke on condition of anonymity, said, “The IITs were getting good funding from HEFA and it was working well for us. I am disappointed that the government has decided to cut funding to the agency. I hope they increase allotment in other ways now.”
A faculty member at IIT Kanpur said: “First the government asked us to take funds from HEFA and now they have cut funding to the agency, how are we supposed to take care of our infrastructure development?”
The faculty member, who didn’t wish to be identified, added: “I have no idea what is the thinking behind this, I just hope the institutions do not suffer… our hostels are in a dilapidated state, many laboratories need maintenance, there is a lot of work that goes into running an institution, especially IITs.”
A professor at Delhi University echoed similar views. “The University Grants Commission is not giving infra funds to us and now HEFA also looks like a failed project… We will have to just wait and see what happens to financing to colleges and universities,” said the professor, who didn’t want to be named.