Subsidising IITs is Not a Handout to the Undeserving

The argument that higher education is not a merit good and the government ought to spend on school education instead, is a false binary.

Credit: PTI

Not all IITians walk away with sky-high salary packages or do not contribute to the process of nation-building. Credit: PTI

Recently newspapers were abuzz with reports that IITs,  India’s premier technology institutions, have hiked annual tuition fees from Rs. 90,000 to Rs. 2 lakh, a more-than-two-fold hike. The standing committee of the IIT council (SCIC) had proposed a fee of Rs. 3 lakh per annum. The committee had reasoned that “On an average, it costs a bit over Rs. 5 lakh a year to educate one student at an IIT,” and felt that 60% should be collected from them. This would ensure financial autonomy for the premier institutes, averred the report.

Although the government has not accepted the SCIC’s recommendations in toto,  the move towards another hike, even if the quantum may not be as high as recommended, is alarming and needs to be countered with reason.

Last year on social media a message was being circulated exhorting the government to stop “subsidised education” to IIT students. The reasoning was IITians use public money to fulfil their private ambitions. They bag packages worth crores in campus placement. They hardly contribute to nation-building and therefore should not be paid for out of public funds. Such demands have not been raised only by the unaware WhatsApp users who in their fit of patriotism chose to circulate it far and wide, but also by noted economists in the past, albeit with a slightly different rationale. Their line of argument was that education at IIT is not a merit good; it does not benefit society as a whole. As it benefits only a minuscule minority, it ought to be stopped.  The government should rather spend on school education which needs hard-earned public money more than IITs.

Another argument in support of a massive fee hike is that IITs provide merit-cum-means (MCM) scholarships to the deserving and needy students who then pay a very small fraction of their tuition fees (though their hostel fees and mess charges are at par with other students; though more on it, later). Another very convenient option for students is to avail an education loan which they can pay back after they get the much-talked about pay packages worth crores. In fact, the government has started an online portal for facilitating education loans. Otherwise also, education loans are never really a problem for an IIT student, because banks are assured of a timely repayment given the good placement records of IITs.

Each of these arguments ignore certain basic facts about IITs and the past circumstances and future prospects of  IITians. The latest report of the SCIC is titled ‘Roadmap to Financial Autonomy of IITs,’ and aims to achieve this autonomy through this hike. But the fact is IITs enjoy substantial autonomy already despite subsidy for some of the students. A fee hike is unlikely to make IITs independent of government financing, given the huge funding required for scientific research. A better way to ensure autonomous funds could be to tie up with industry and foreign institutions for joint research. Anyhow, complete autonomy is unwarranted as public money is involved and IITs also need to address prevailing socioeconomic challenges through socially relevant research. This is the vision with which they were set up by India’s first prime minister. 

Moving on to the argument that subsidy to IITians is not warranted, because they get fat pay packages: the fact is there are sixteen IITs in the country. Every IIT has a different placement scenario, with top pay packages mostly coming from older IITs. Further, a majority of the students get much smaller offers and news reports about the maximum packages distort the reality. This is primarily the reason why IITs decided to keep pay packages secret in the last placement season.

Indian pastures

Furthermore, the argument that IITians do not contribute to nation-building because they leave the country for greener pastures is not wholly true.  The names of Manohar Parikkar, D. Subbarao, Raghuram Rajan, Ashok Khemka, YC Deveshwar, Nandan Nilekani, and many more debunk this argument. IITians are instrumental in the task of nation-building in various fields, be it administration, business, technology, education, and now even politics. In fact most of the professors at IITs are IITians themselves.  Raghuram Rajan said in a recent talk, that he was unable to afford a blazer in his school days. It is anybody’s guess if he could have afforded post graduation at IIM and doctorate in finance from a foreign university if IITs were “financially autonomous” in his time, given the fact that he would have had to borrow from the bank and would have been caught in the vicious repayment routine immediately after passing out. 

The argument that higher education is not a merit good and the government ought to spend on school education instead, is a false binary. It is a concocted ‘either-or’ dilemma, which is more psychological than logical.  This argument is reminiscent of a similar argument given by British Raj while explaining its financial constraints and consequent helplessness in deciding between mass school education and higher education. IITs are not given grants by snatching them away from the dilapidated schools in India. It is equally undesirable that bright students are unable to afford education at IITs after their school education, because government could spend only on schools. The government ought to look after the needs of both the sectors. Technical education is as much a merit good as research by ISRO, TIFR and other research institutes. Just like the money spent on these organisations is justified on the basis of socioeconomic impact of their innovations, same criteria need to be applied to IITs.

Scholarship benefits

Let’s come to the provision of scholarships and loans. The fact is, only a fraction of students are able to avail merit-cum-means (MCM) scholarship in IITs, either those who have faced abject poverty or those who are able to fudge their parental income (mostly self-employed people) given the fact that the ceiling for parental income to come under the MCM net is extremely low. At present, it is Rs. 4.5 lakh per annum and is available to only 25% of the students. If IIT’s fees are to be hiked, then the income ceiling for MCM should be hiked to at least Rs. 10 lakh per annum and the limit of 25% should be removed. Most of the salaried parents, including the government employees would easily breach this ceiling and thus become ineligible for availing the scholarship provision. It means those who earn Rs. 4.5 lakh per annum will have to pay ₹ 2 lakh out of this for their ward’s education, and manage their household and other expenses within the leftover of ₹ 2.5 lakh. According to one survey, 97 percent of working Indians earn less than Rs. 17 lakh per annum. True, IITs provide good scholarships to SC/ST students, but many other students who are financially constrained are not so successful at availing the scholarships. Further, there are many essential expenses in a college which are not covered by MCM – food, computer, hostel accommodation, books, technical equipment needed for an engineering education, etc. These add up to cast a substantial burden on the students. A lower middle-class family would face the double whammy of high tuition fee and exclusion from public social security net, despite the fact that its disposable income would be only slightly more than Rs. 2 lakh per year.

Education loans in India are one of the most exploitative categories of loans. It hits the borrower on multiple fronts. The rate of interest charged is higher than even home loans, because of the fact that there is no collateral in case of education loans. It is more secure for the banks to lend for buying a car or a property, but less important to help out a needy student. The rate of interest may be as high as 15 %. The net result is that the student ends up paying more than double of what she actually used during her studies. Increasing the fees will only push the students to borrow more, and thus pay back even more. The pernicious effect of loan continues many years after graduation. The student is forced to find employment by the end of her studies. The psychological pressure this indebtedness, at the start of one’s career, creates is tremendous. She cannot even think of going for higher education. The dream of establishing India as research and innovation hub will be put paid to, if graduates from the best technological institutions are forced to run after hefty pay packages instead of going for higher education.

Similarly, India’s start-up mission will cater only to the relatively well-heeled IIT graduates, since most of the other graduates will not be able to take the risks associated with a start-up, as they will have to pay their loans back. 

Most advanced nations have a well-functioning, government-sponsored higher education system. This “subsidised” technical education has played an important role in making countries such as Germany and Japan what they are today. Technological advancement is a necessary prerequisite for national progress. This advancement can be ensured only if talent from all socio-economic strata is allowed to realise their potential in this field. The move to increase the fee at IITs would make the best technical education out of bounds for the substantial talent pool amongst the financially weak, thus jeopardising technological progress. Only the well-heeled will be able to join IITs. Those among financially weak who do decide to join IITs and borrow for their education, will have to settle for a salaried job after undergraduate study and pay loans thereafter, even if they show great academic potential. Short-term concerns about financial autonomy and fiscal consolidation may result in long-term technological enslavement, industrial backwardness and high unemployment, apart from the patently unjust phenomenon of making IITs and further post-graduate studies out of bounds for the poor. It is high time we realise that by subsidising higher technical education, we are not giving out a dole to the undeserving, but securing our own future as a nation.

Abhay Sharma is 2011 batch civil servant and a graduate from IIT-Delhi.

  • dkarthik

    Thanks a lot for writing this Abhay. I have also written earlier on the same subject. Please find my articles here.

    Some of the reports that I dug out and the numbers I could fetch may help substantiate your arguments.

    • abhay sharma

      Thanks Karthik. Just read your articles. they are very well researched. Congratulations. Though I also wrote the article around the same time, mine is more of an emotional outburst than a researched article. I have myself faced the problems that arose due to education loan post IIT. would be glad to connect. I can be reached at


    Notion of non- subsidized higher education, especially in institutions of excellence is gaining ground after the present spate of college unrest and dalit awakening. The thrust for abolishing all forms of scholarships and hiking the fee beyond the reach of common man has its roots in the political assertion if deprived sections. Whether it is Ambedkar Periyar study circle or Rohith Vemula incident, the oppressed have begun to question the establishment on many fronts including Hindu manu system. The upper castes are becoming insecure by the day as knowledge is spreading among those who were at the receive end of the society. This agreement of hiking fee is a cloak to cover up the real intent of the rulers. There are number of ways to stop the higher educated from running away from the national mainstream. Government can provide decent facilities, salaries, freedom to perform jobs tasks, end discrimination in workplaces etc. But sighting the unavailability of a graduate of IIT or IIM for fee hike and narrowing of facilities is not an explanation for the ills of system lie elsewhere.