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Road to world class universities needs tax waiver, not tar 

Published: 12th November 2016 10:00 PM  |   Last Updated: 12th November 2016 11:24 AM   |  A+A-

When Finance Minister Arun Jaitley announced in the 2016 Union Budget an enabling regulatory architecture to create 20 world-class institutions, the message was loud and clear: India wants to join the global league. World leaders like Putin and Abe have also resoundingly articulated policies to increase their share in the world’s Top 100 by 2020.

What India needs to understand is that nobody has understood what a World Class University (WCU) is and in the words of renowned educationist and researcher Philip Altbach, “Every country wants a world-class university. No country feels it can do without one. The problem is that no one knows what a world-class university is, and no one has figured out how to get one.” 

Weill Cornell Medicine campus in Qatar

The Times Higher Education 2014-15 rank list quantified the average characteristics of the Top 200 global universities—total annual income per academic was close to $750,000, total research income per academic was $230,000, 43 per cent of papers were published with an international co-author, 20 per cent of student and faculty were international and student-faculty ratio of 11.7 to 1.

Finances topped the list of serious requirements to build a WCU. According to a World Bank report, establishing a WCU in the late 19th century required $50 million and 200 years. The University of Chicago in the beginning of the 20th century invested 20 years and more than $100 million to build a WCU. The Cornell University spent more than $750 million in setting up a world-class medical school in Qatar in 2002.

King Abdullah University of Science and Technology in Saudi Arabia was established at $3 billion and operates outside the purview of the Ministry of Higher Education. The estimated cost of creating a WCU today is close to $1,500 million (over `10,000 crore). It is not possible to allocate such huge amounts to create 20 WCUs nor is the proposed annual grant of `100 crore to 10 government institutions for a five-year period is adequate. With the 2017 Budget about to be announced, now is the time to ask for more to bridge this gap. 

The pressure on the government to maintain the tax/GDP ratio balance across several socially critical sectors and the fight for capital is understandable. There are other ways for the Finance Ministry to deploy the much need investment in WCUs: * Service Tax exemptions for all taxable services offered by and to WCUs; * Complete waiver of import duties on all research and teaching assets; * Access to cost competitive debt capital either through a consolidated bond issue guaranteed by the government or individual institutional debts from overseas markets by easing strict RBI regulations; * Provide accelerated tax exemption of 200 per cent to corporate/philanthropic grants made to WCUs with a minimum grant amount fixed; * Complete freedom to create reasonable revenue instruments that are allowed by law to ensure substantial working capital liquidity; * Jointly with other ministries, a one-stop harmonious approval window for all approvals—programmes, building, environment, home, finance departments, etc. at both Central and state level

The aggregate revenue foregone through direct/indirect tax incentives and exemptions to corporates in the last 10 to 12 years is conservatively estimated to have exceeded `5 lakh crore in return for significant wealth and employment creation. There is an effort to rationalise these exemptions and substantial portion of the resultant savings in ‘foregoable’ revenue can be diverted to benefit WCUs without considerable burden on the exchequer. Potential WCUs look forward to the 2017 Union Budget with a hope on possible pathways for raising finance. The road to WCUs needs tax exemption and not tar for construction.

The writer is Dean, Planning & Development, SASTRA University


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