In a big boost to the education sector, the Cabinet Committee on Economic Affairs (CCEA) on Wednesday 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 mobilise Rs 1,00,000 crore for Revitalising Infrastructure and Systems in Education (RISE) by 2022.
In order to expand this facility to all institutions, especially those set up after 2014, the central universities which have very little internal resources, and institutions like AIIMS and Kendriya Vidyalayas, the Cabinet Committee on Economic Affairs (CCEA) has approved five conditions for financing under the HEFA and the modalities of repaying the principal portion of the fund.
The technical institutions which are over 10-years-old will have to repay the whole principal portion from the internally generated budgetary resources. Such institutions started between 2008 and 2014 will have to repay 25 per cent of the principal portion from internal resources and receive a grant for the balance of the principal portion.
Central universities which started before 2014 will have to repay 10 per cent of the principal portion from internal resources and will receive a grant for the balance of the principal portion. The Newly Established Institutions (started after 2014) Grant would be provided for complete serving of loan, including principal and interest for funding construction of permanent campuses.
For all other educational institutions and grant-in-aid institutions of the Ministry of Health such as 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.
The Cabinet has also permitted the HEFA to mobilise Rs 1,00,000 crore over the four years until 2022 to meet the infrastructure needs of these institutions. The CCEA has also approved an increase in the authorised share capital of HEFA to Rs 10,000 crore, and approved infusing additional Government equity of Rs5,000 crore (in addition to Rs 1,000 crore already provided) in HEFA. The CCEA has also approved that the modalities for raising money from the market through government guaranteed bonds and commercial borrowings would be decided in consultation with the Department of Economic Affairs so that the funds are mobilised at the least cost.
Officials here said that this would enable addressing the needs of all educational institutions with differing financial capacity in an inclusive manner. Also it would enable HEFA to leverage additional resources from the market to supplement equity, to be deployed to fund the requirements of institutions. Government guarantees would eliminate the risk factor in bonds issue and attract investment in this important national activity.
The HEFA was set up on May 31, 2017 by the Central Government as a Non-Profit, Non-Banking Financing Company (NBFC) for mobilising extra-budgetary resources for building crucial infrastructure in the higher educational institutions under the Central government. In the existing arrangement, the entire principle portion is repaid by the institution over ten years, and the interest 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.
INCREASE IN SHARE CAPITAL
- The CCEA has also approved an increase in the authorised share capital of HEFA to Rs 10,000 crore, and approved infusing additional Government equity of Rs 5,000 cr (in addition to Rs 1,000 cr already provided)
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