New Delhi: HRD Minister Kapil Sibal on Tuesday hit out at the Planning Commission for rejecting a proposal to set up an education finance corporation to refinance student education loans, saying the move was against the interest of the students.
"The HRD Ministry has been knocking at the doors of Planning Commission saying please set up the corporation... and my friend Montek has been little more conservative than me on these issues. I have to say this because they rejected idea of the corporation," the Minister said.
"Unless the loans are guaranteed by government, no financial institution is going to give loans," he said at a function here with Planning Commission Deputy Chairman Montek Singh Ahluwalia in attendance.
Sibal said the present loan structure of the government was not conducive for either student taking loan or bank offering loans. "We need to actually liberalise the whole structure".
In this context, he suggested that financial institutes should have a flexible lending policy when extending loans for setting up educational institutes.
"I believe the banks must be asked to give long term loan to educational institution paid over period of 20 to 25 years. To set-up an education institution nobody is going to borrow at 12 per cent or 16 per cent and set-up up institution where you have to return the loan over period of 7 years," he said.
Member Planning Commission Narendra Jadav, on the occasion, said a working group on education has recommended allocation of Rs 4,13,000 crore for the 12th plan Period, the allocation of which will be finalised next week.
Favouring policies like free land for setting up educational institutes and health care facilities, Sibal said no private sector would invest unless "you give them appropriate environment".
In this regard, he said the government has to clearly spell out the stand on issues which are hindering reforms initiatives.
He touched upon the issue of litigation involving land and confided that when he suggested free land for educational institutes and health facilities being in an empowered GoM looking into natural assets, "there was enormous opposition to this even in government".
"Every time you want to do something like this, the court thinks we are giving freebies to private sector. Unless these issues are clarified, we won’t be able to move forward. Government has to strongly state that these are the fundamentals without which no reform process can take place," he said.
NR Narayana Murthy, who heads a committee on corporate sector participation in higher education, said India does not have adequate number of educational institutions to take care of eligible students.
He said about 26 million seats need to be provided over the next decade.
"The existing higher education system in India lags in comparison to global standards and is inadequate to meet the demand. No Indian college or university features in top 300 list of Times higher education supplement," he said.