FINANCE
I-Introductory: Present Financial Position of Universities 1. Income and Expenditure in Universities. 2. Increased Expenditure
3. Increased cost and Diminished Income.
II.-Finances of University Colleges and Affiliated
Colleges 4. Financial Resources of Affiliated Colleges : (a) Grants ; (b) Endowments. 5. Endowments of Universities : Exemption from Income-tax. 6. Government Grants for Universities. 7. Changed Outlook required 8. Expansion of Primary and Secondary Education.
III.-Purposes for which Grants are Needed 9. Grants to British Universities. 10. Requirements of our Universities and Colleges. 11. Scholarships and other Awards. 12. Other Requirements. 13. Financing of New Universities.
IV.-Grants- Central and Provincial 14. Requirements of Colleges. 15. Central responsibility for Universities.
16. Method of making Grants : The University Grants Commission.
V.-Financial Implications 17. Enrolment and per capita Expenditure. 18. Teachers' Salaries. 19. Libraries. 20. Scholarships. 21. Residential Accommodation. 22. Professional Education. 23. Annual Expenditure.
VI-24-Recommendations
I.-Introductory : Present Financial Position of Universities 1. Income and Expenditure in Universities- A careful perusal of the budget statements presented by the universities in India reveals the fact that the financial position of most of the universities is far from satisfactory. In most cases the universities are working on a, deficit budget and in all cases, it is seen that the revenue from the different sources is hardly sufficient to meet the average present needs of the universities, and in no case are there sufficient funds either for expansion or for improvement in the many directions needed.
2. Increased Expenditure- It is to be noted that the expenditure in all universities has increased considerably within the last ten years without a proportionate increase in income. The increase in ex- penditure is due to causes over which the universities have had no control. Briefly stated, conditions during the war and in the, post-
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war period have brought about certain abnormal increases in expen- diture under heads which the Universities could not have anticipated prior to the War. In those universities which had substantial en- dowments or which had capitalised funds, the reduction in interest rates has resulted in a number of institutions suffering serious loss under general endowment income.
While there has thus been a great decrease in the annual income of the universities concerned, there has on the other hand been, as stated above, a very large increase on the expenditure side. The main item of increased expenditure has been on the salaries of teachers and of the administrative staff, necessitated by higher costs of living. In particular, the salaries of the junior teaching staff and of the subordinate administrative staff required to be materially enhanced. This increase was, not proportionate to the rise in the cost of living and was given effect to with great difficulty on account of paucity of funds. The Bombay University, for example, notes that the decision of the Government to increase by Rs. 10 the dearness allowance paid to their employees in receipt of salary not exceeding Rs. 250 had the effect of burdening the University finances with an additional recurring expenditure of over Rs. 30,000 Per annum. The changes in the grades of lecturers" salaries in some North Indian universities were responsible for a considerable additional recurring expenditure. Travelling allowance, have gone up on account of the changes in the system of classes and fares on all the Indian Railways, compelling most universities to pay first class fares where they used to pay second class and expenses on this head may have to go up further on account of Air Travel facilities now available.
3. Increased Cost and Diminished Income.- Besides these general increases in expenditure, it is to be noted that considerable increase is also inevitable owing to the increased cost under all items of ex- penditure in a university. The university publications cost more today on account of increased cost of paper; laboratory equipment has become very much more costly, cost of construction of buildings and hostels has greatly increased while the increased cost of imports and the high rates of examination charges have resulted in Increased expenditure under necessary heads.
It is, therefore, not surprising that a scrutiny of the budgets and financial estimates of the different universities in India shows deficit balances in almost every university, the position thus being precarious in some and causing anxiety in almost all. A feature of expansion of university education that has affected the finance
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seriously is the starting of a number of new universities within a very short period and the consequent reshaping of existing universities. Reference has been made to the starting of the Poona University and the proposals for the Karnataka and Gujarat Universities. Within the last five years several new universities of an affiliating type have been started: Utkal, Saugor, Gauhati Rajputana, East Punjab , Kashmir, Poona, Karnataka, Baroda and Gujarat Universities, and there are reports current that more universities are likely to be started. The need and utility of more universities are not questioned, but in a chapter on finance, it is obviously necessary to take note of the financial implications oil both the existing universities and the proposed universities. Reference will be made at a later stage in this report to the financial conditions that should be considered as fundamental for the starting of a new university. We are here concerned with the effects of the rise of new universities on the finance of existing universities. So long as universities depend largely upon fee income derived from examinations. the seceding of a large number of colleges and of a corresponding number of examinees consequent upon the establishment of these new universities imposes and has created conditions resulting in an acute financial crisis. These difficulties will be accentuated when our proposals for the transfer of the High School and Intermediate classes from the universities are given effect to and when the university course for the First Degree is lengthened from two years to three years. The. first proposal will reduce the income derived from examination and tuition fees and the abolition of the classes will reduce the numbers of only the lowest paid teaching staff. The additional year for the Bachelor's degree will involve the employment of a larger number of teachers on higher salary. Moreover in very new university postgraduate classes have to be started and expensive instruction given to the small number coming to each one of them. Further the research work which must be encouraged in each of these universities entails considerable expenditure. An abstract statement of the@ financial position as culled from the Budget Estimates of the universities, wherever available, is appended (Appendix N).
II.-Finances of University Colleges and Affiliated Colleges 4. Financial Resources of Affiliated Colleges (a) Grants.- In dealing with the finances of universities, it is necessary to take into consideration, the financial condition of the universities and of the affiliated colleges in a university. While the finances of a university are largely drawn from endowments, from examination fees, tuition fees and grants, the affiliated colleges do not generally derive any financial assistance from the university directly. The financial assistance given to affiliated colleges varies from province to province;
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in some it, amounts to 50 per cent of the salaries of sanctioned Posts but in some provinces no grants are given by the Government to the private colleges. The grant-in-aid code of Provincial Governments which is followed in some provinces is not too liberal and it is not liberally interpreted either. Besides many of the colleges which depends entirely oh students fees, may not only cover all expenses from them but sometimes even make a profit.
The grants to aided colleges are given for:-
(a) Buildings,
(b) Equipment,
(c) Library,
(d) Fee concessions, and
(e) Teaching staff.
It used to be the practice formerly in some provinces that the build- ing and equipment grant was restricted to 50 per cent of the cost. Recently, Provincial Governments have made radical changes restricting the amount of grant that may be given towards these very necessary purposes. At Delhi, the Government of India is agreeable to the payment of 50 per cent of the net expenses for erecting new buildings for the colleges in the University area. The Madras Government, however, has passed. orders restricting the building grant to a maximum of Rs. 75,000 for college buildings. The conditions pertaining to grants for equipment and library are stringent and are not always such as will enable a college to proceed with the urgent requirements with any degree of certainty; and these grants are also given after completion of the buildings or the purchases required, and managements find it difficult to meet the expenditure in advance of the grants that are likely to be received. The position of the affiliated colleges, therefore, has been causing considerable anxiety both to the managements and to the universities concerned as the expenditure to be incurred has increased for the same reasons for which expenditure has increased under the different items of uni- versity finance.
(b) Endowments.-Nor can it be said that the colleges have sub- stantial endowments to fall back upon. Even in regard to well established colleges, the income from endowments had decreased and the income from other sources had dwindled. Taking all these factors into consideration, a method of stabilizing the financial security of colleges has been adopted in the Madras University, where by the management wishing to start any new colleges had had to furnish an endowment of five lakhs of rupees for a First Grade College
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and three lakhs for an Intermediate College, which under the present fairly low rate of interest, will yield an annual income of Rs. 15,000, for First Grade and Rs. 9,000 for an Intermediate College. A strict adherence to this condition of affiliation within the last six years in the case of newly started colleges has enabled the University to satisfy itself about the proper running of these colleges, while the managements have been relieved of a great deal of financial embar- rassment which they would have had if such a secure income was not, available.
It must, however, be stated that in spite of these endowments, neither the new colleges nor the old colleges are in a position to meet the growing demands in regard to salaries and to the other conditions of efficient instruction. The scales of salaries payable to teachers have been separately dealt with in Chapter III but it must be repeated that one of the chief drawbacks in most colleges is that the salaries payable to teachers are inadequate, and it has led to a great deal of discontent among the teaching staff, which must of necessity be reflected on the tone and efficiency of the colleges.
5. Endowments of Universities.-It has been stated that the uni- versities derive their,income either from endowments or from Govern- ment grants apart from the examination fees and tuition fees levied by them. Although a few universities have had large endowments given, it may be said that on the whole the income derived from endowments is by no means adequate to meet the needs of modern universities. Large endowments have been made to a few universities by the founder or by generous donors. The Annamalai University owes its inception to the generosity of the late Annamalai Chettiar of Chettinad. The Banaras and the Aligarh Universities have had large endowments given by princes and commoners. The Calcutta University has had endowments given by such eminent persons as P.C. Ray, Rash Behari Ghose and Tarakanath Palit; while Bombay has had large endowments from the Singhania and Tata Trusts besides endowments from several other philanthropic citizens; the University of Nagpur has had a large endowment under the Laxminarayan Trust, Fund and the Madras University has for the first time been given a generous endowment by Dr. Alagappa Chettiar. The new university at Saugor owes its existence to a dona- tion of Rs. 2,000,000 from Sir Hari Singh Gaur which is regarded as a first instalment. It cannot, however, be stated that endowments to universities in this country have flown in the same generous manner in which they have either for the British universities or for the American universities. It has been well said "that a university's general endowment fund is the surest foundation upon which to
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build its independence and stability and that a university with substantial background of endowment is in fact in a strong position not only as regards its own Internal control but as regards new deve- lopments which it may consider to be particularly desirable". While it is hoped that similar endowments may be forthcoming it is not only the rich who should give such endowments, but all those who have enjoyed the benefits of a university education should likewise realise the duty they owe to universities and should repay them insome form or other. It must, however, be confessed that under present conditions, it would be undue optimism to expect universities to be run on endowments that may be forthcoming.
Even in the British universities endowments were responsible for 14.5 per cent of the total income of the universities in 1935-36, while in 1946-47 it fell to 9.3 per cent. This decrease however is not in the total amount derived from endowments. Whereas the total income of the universities was seven million pounds in 1935-36, it was 13 million pounds in 1946-47.
Exemption from Income-tax.-It has been suggested by some that donations to universities will be encouraged if we have a clause in our Income Tax Laws regarding exemption from taxes to be granted for gifts for educational purposes. These may be on the lines of the American Tax Law which allows for exemption of an amount donated by an individual to a Corporation or Trust Fund organised and operated exclusively for scientific, literary or educational purposes. The same proviso about the maximum amount to be exempted, namely 15 per cent of the tax-payer's net income, may be accepted *1.
6. Government Grants 6. Government Grants for Universities. Universities have been receiving grants either from Provincial Governments or from Central Government and in some cases from both. The majority of the universities situated in the provinces have received grants from Provincial Governments. These grants are annual grants and in some cases they are treated as block grants so that a definite income from this source is guaranteed for the University concerned. The Central Government has held itself responsible for grants, to three universities : the Banaras University and the Aligarh University which were started as sectional universities, both of these being situated in the United Provinces and the comparatively more recently started University at Delhi in the Delhi Province which is within the direct jurisdiction of the Government of India. Till very recently,
*1 Reference Section 23 taken from a Publication of the, Bureau of Internal Revenues 1943.
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the Central Government did not give any annual grants for other universities; within recent years, grants have been given to certain universities for specific objects, largely for technological education, while more recently grants have been given to some universities on ceremonial occasions or to take up new activities.
Small amounts have been given to university departments of research for the furtherance for research programmes by some of the organizations responsible for encouraging research. Thus, university departments of research or research departments in colleges affiliated to universities have received small grants from (a) Indian Research Fund Association, (b) Council of Scientific and Industrial Research, (c) Imperial Council of Agricultural Research, (d) Department of Scientific Research, and similar bodies.
The Government of India started a few years ago the University Grants Committee. It is understood that the University Grants Committee is mainly concerned with recommending grants to the three universities financed by the Government of India, namely Banaras, Aligarh and Delhi. We learn, however, that it is the intention of the Government of India to expand the activities of the University Grants Committee so as to cover all Indian universities. We have referred to the place of a University Grants Commission in relation to universities in general at another place in this Report (Ch. XIII).
7. Changed Outlook- Required-From what has been stated above, it will be obvious that if university education is to progress on right lines and if the universities in India are to take their full share in the responsible task of building up the structure of higher education, a changed outlook in regard to the responsibility of the State and the public in the maintenance of these universities is essential. At the present time, the problems connected with University education loom large. The need for the expansion of educational facilities to meet the growing and imperative demand of the large section of the youth of the country, the urgency of opening out many branches of learning which hitherto found no place in a university system of education, the development of the facilities for post-graduate and higher education and the great need to increase and stimulate research in all directions cannot obviously be ignored. Independent India cannot for long look to the more advanced countries for intellectual food and sustenance. The time has come when the Government and the leaders of public opinion must take stock of the situation and enable the universities to function so that they may largely be self-sufficient and self-reliant in all grades of intellectual pursuit.