The UPA government’s ambitious proposal to set up a National Educational Finance Corporation (NEFC) is likely to be shelved after being strongly opposed by the Planning Commission.
The Union human resource development ministry’s proposed establishment of NEFC, which aimed to provide loans for infrastructure development and expansion of educational institutions as well as re-finance facility for student loans, has been opposed by the Planning Commission.
Sources stated that the Planning Commission’s opposition for giving the go-ahead to the National Educational Finance Corporation means that it has been delayed indefinitely by the HRD ministry. The Planning Commission is understood to have opposed the NEFC stating that the government is already making financial contribution to the education sector and there is no need for establishing another independent body.
Establishment of a National Educational Finance Corporation was a high-priority proposal of the UPA government’s educational reform agenda, being implemented by the Kapil Sibal-led ministry. The move was aimed at providing accessibility to education to the underprivileged. The proposal aimed at setting up of two separate entities within the corporation. One dealing with education loan guarantees for students while the other providing financial support to the educational institutions requiring loans.
Private, aided and government institutions would have access to the National Educational Finance Corporation for finance on the pattern of soft loans or at priority sector lending rate which are not available to the sector at present, sources stated.
The corporation was expected to provide much-needed relief to the education sector which has been facing a funds shortage both at the student and institutional level.
According to HRD ministry estimates the requirement of funds for the education sector could grow to as high as `1.55 lakh crore in 2016-17. Currently, the requirement stands at approximately `60,000 crores. Through the corporation the government wanted to ensure lendable funds of an estimated `38,000 crores by next year and `1 lakh crore by 2016-17.