Budgetary Reforms and Subsidies in Higher Education

Budgetary Reforms and Subsidies in Higher Education Jandhyala B G Tilak WHILE Govinda Rao (1992) examines several social and economic services regarding the current state of public subsidies and recovery, with a view to identifying the major problem areas and outlining the needed policy changes, I wish to comment on only one particular area, an area in which my comparative disadvantage is less, viz, public subsidies in education, particularly higher education. I attempt to show here that (i) Rao's estimate on recovery rate in higher education is far from correct, (ii) Rao's plea for economic pricing of sectors like education is not based on sound principles of public finance, (iii) Rao's suggestion regarding the desirable level of recovery rate is neither desirable nor feasible in the broad socioeconomic framework, and (iv) there are probably more efficient cost recovery strategy alternatives than the one suggested by Rao. However, from this single case of education, which is only one of the several areas Rao has covered in his paper, I do not question his whole analysis in general. That is left for those who are more familiar with the various sectoral and general aspects of public finances and budgetary subsidies.