Higher education institutions should be allowed to invest surpluses in more asset classes: Ficci

Higher education institutions should be allowed to invest their surpluses in a wider range of asset classes, industry body Ficci has suggested to the finance ministry. In its pre-Budget recommendations to the ministry, the body said allowing university endowments to invest in alternative investment funds and other asset classes will bring in greater transparency and better governance practices in the system.

With the evolving need for a knowledge economy along with internationalization and massive human capital, the higher education sector in India is set to witness a host of reforms, it said in a statement on Friday. The operating revenue generated by higher education institutions in India is estimated to be upwards of Rs 1 lakh crore.

This would, it said, constitute around 20 per cent of the overall size of charitable institutions, in which the total operating expenditure is estimated to be around Rs 5 lakh crore as of 2017-18. "Clearly, there is a significant surplus being generated in the higher education system annually. It amounts to around Rs 15,000 crore," it added.

However, there are constraints around investing surplus funds generated in the higher education system in India. Currently, these funds are invested in real estate and there are transparency issues in these investments, it said.

"Globally, higher education institutions have been investing in various asset classes such as domestic and foreign equity, alternative investment funds, real estate, and infrastructure investment trusts to generate additional income," it said. These investments have generated higher returns and have contributed to the growth of endowment funds of these institutions, the industry chamber said.

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