A Perspective Note on Non-Tuition Fee Increase

at IIT Bombay from Academic Year 2017-1018

- Need, Mandate, Rationale, Impact

7th July 2017

IIT Bombay
 CONTENTS OF THIS NOTE
NEED for increase - Institute Finances Perspective
MANDATE for increase - General Financial Rules (GFR) of
the Government of India
RATIONALE for increased amounts - Increase in
expenditure components of expenses directly connected
with services/benefits to students (hostels, gymkhana,
medical, examination etc) for which they are charged
non-tuition fee components apart from overall increase
in Institute expenditure
IMPACT Comparison of increased expenditure with the
increase in non-tuition fees and impact on Institute
Finances
 INSTITUTE FINANCES
1. Main A/c - Funds for running the Institute for sustaining core
educational and academic degree program activities and its entire
related supporting ecosystem
a) MHRD Plan support: Capital Expenses
Infrastructure (Buildings, Facilities, Equipment, Work Spaces, Living
Spaces, Campus Development etc); Library Resources;
Scholarships/Assistantships
b) MHRD Non-Plan support + Internal Earnings of the Institute: Operational
Expenses (Recurring Expenses)
Faculty & Staff - Salary+Pension+Allowances+Benefits; Academic;
Administrative & General; Maintenance & Repairs
2. IRCC A/c Earmarked project funds for R&D/Consultancy &
Internal support for R&D
3. Donation Earmarked donations for support to donor preferred
academic, R&D, Infrastructure & student support activities
This note is mainly concerned with fee increase in relation to 1. b)
above
 MHRD NON-PLAN FUNDS

Non-Plan Grant/student (CPI

Non-Plan Grant inflation adjusted)
340 5
300 4
Rs. crore

Rs. lakh
260 3
220 2
180 1
140 0
2010- 11-12 12-13 13-14 14-15 15-16 16-17 2010- 11-12 12-13 13-14 14-15 15-16 16-17
11 11
Financial Year Financial Year
Inflation correction based
on CPI
4
 NON-PLAN EXPENDITURE
Non-Plan Expenditure
Salary + Pension
500
MHRD Non-Plan Grant
400
Rs. crore

300

200

100

0
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
Financial Year
5
 Notes on Non-Plan Funds from MHRD
& Internal earnings
Non-Plan Funds from MHRD per student inflation adjusted also
reduced (from Rs 3 lakhs to Rs 2 lakhs) over FY 2010-11 to 2015-16 .
Non-Plan (i.e. operational) support goes towards
Salary + Pension + Allowances & Benefits (over 90% - eg Rs 307 cr out of
NP grant of Rs 323 cr in FY 15-16),
Other operational expenses (about 10% - eg Rs 16 cr out of NP grant of
323 cr in FY 15-16
Internal earnings support most of the operational expenses of the
Institute (eg - Rs 112 cr in FY 15-16). Adding 16 cr available from NP
grant the total available funds for running the Institute in FY 15-16
were 128 cr (i.e. approx 1.28 lakhs per student).
Internal earnings doubled in 5 years (no increase in fees but student
numbers increased from about 6000 to 10000)
Internal earnings distribution - eg FY 15-16:
72 cr Academic earnings; Academic earnings (from students): Tuition
30.24 cr, non-tuition fees 19.19 (this is the component under discussion).
40 cr (Other earnings).
 General Financial Rules of GoI
General Financial Rules are also applicable to all autonomous
bodies funded by the Government of India. Autonomous Bodies are
required to move towards increased self-reliance in generating
financial resources

GFR Rule 47 User Charges:

User Charges is an important component of the non-tax
revenues. Each Ministry/Department may undertake an exercise to
identify the user charges levied by it and publish the same on its
website.
(i) While fixing the rates of user charges, the
Ministries/Departments must ensure that the user charges recover the
current cost of providing services with reasonable return on capital
investment.
(iii) The rates of user charges should be linked with appropriate
price indices and reviewed at least every three years.
 General Financial Rules of GoI
GFR Rule 228
(iv) All autonomous organisations, new or already in existence
should be encouraged to maximise generation of internal resources and
eventually attain self-sufficiency.

GFR Rule 229

(vi) User Charges: Governing Body of the Autonomous Body shall
review user charges/ sources of internal revenue generation at least once a
year and inform the administrative Ministry. This exercise should preferably
be completed before the formulation of Union Annual Budget.

MHRD draft MoU with IITs states that apart from MHRD allocation, the
Institutes will raise funds from (i) User Charges in the form of Fees, (ii)
User charges other than fees, (iii) .. Etc.
 Rationale for increased amount and
data on expenditure
Rationale for increase
Rationale is based on Institutes overall financial picture (need) and
General Financial Rules (mandate) already outlined
The rationale for actual amounts is also related to direct expenditure
on Hostels, Gymkhana, Medical, etc, (as per breakup of fee
components and to the extent they can be extracted from the
Accounts system). This is presented in the next few slides, through
related major components of recurring expenditure, as available from
Institute accounts.
Several minor components as well as indirect expenses connected
with non-tuition fee line items are not included. Related expenses
spread over different sections of the Institute and embedded different
accounting ledgers, not easily extractable, are not included in the data
presented.
Direct expenses paid to students, not connected with the non-tuition
fee line items, are not shown here (eg student expenses related to
their conference visits, field work, scholarships and assistantships,
etc).
 Major Recurring Expenditure on
Hostels & Gymkhana
Item 2011 2017 Ratio Remarks
2017/
Rs (cr) Rs (cr) 2011
Electricity, HVAC & 2.34 7.30 3.12 Hostels + Gymkhana
Electrical Maintenance Electricity consumption
itself is about 85% of which
Gym is 6.2 %
Housekeeping & 1.35 5.50 Hostels & Gymkhana areas
Dry/Wet Waste of campus
Management

Civil Maintenance, 2.99 13.06 4.37 Buildings and facilities

Repairs, Retrofitting maintenance in Hostels
and Gymkhana areas
Students Gymkhana 0.96 2.02 2.10 Gymkhana Sports, Cult &
Other activities
 Major Recurring Expenditure on Hostels & Medical
Item 2011 2017 Ratio Remarks
2017/
Rs (cr) Rs (cr) 2011
Hostels Budgeted 0.78 0.98 1.26 Main A/c Expenditure only.
Expenses (Wardens
Budget)
Students Medical 0.14 0.65 4.64 Reimbursements
Expenses 0.63 1.75 2.78 Apportioned cost of overall Hospital
running expenses (@50% of actual
shown here as apportioned cost)
Financial Assistance to 5.7 9.89 2.32 See Notes later.
Hostels Hostel
subsidy (Institute
Contribution to Salary
+ Pension + other
benefits of Mess
Workers)
 Major Recurring Expenditure
(other Fee related components)
Item 2011 2017 Ratio Remarks
2017/
Rs (cr) Rs (cr) 2011
Examinations 0.14 0.90 6.43 Towards payment of TA/DA, external examiners
honorarium for report & oral examination.
Current cost for one PhD thesis examination is
Rs 10 K x 2 + 250 USD for thesis examiners
(assuming one of 3 will be from outside the
country) + Rs 5 K x 1 viva examiner + TA/DA (say
Rs 10K min for outstation). Total about Rs 50 K or
more per PhD student
Total: at least 1.5 cr only for PhD examination
assuming 300 PhD per year (already crossed this).
Other (non-thesis) examinations cost not reflected
here spread across ledgers
Convocation 0.59 0.30 0.6 Expenses in 2017 may have been split across
ledgers.

Total 15.62 42.35 2.71 Per student yearly expenditure 2011 - Rs 24794
Per student yearly expenditure 2017 - Rs 42350
No of students: in 2011 6300; in 2017 - 10000
 Notes on Hostel Subsidy
Mess workers not IITB regular employees. Messes were run by hostels
Salary + Pension + other benefits to Mess Workers borne by students from
the beginning apart from consumables/material charges
To reduce the burden on students, Institute bears a part as a subsidy
transferred to Hostels. The students part of this expense is paid by hostels
from the fixed contribution collected through the non-tuition fees paid
every semester (presently 6000/- per sem) and the remaining part is
subsidized by the Institute.
Over a period of time, hostel messes converted to contractor run messes
and mess workers were transferred to other hostel run messes. The
amount collected towards the Mess Establishment charge from students
staying in hostels with contractor run mess is adjusted in the mess bills of
such students. These charges (6000/- per sem now) become effectively a
mess advance only for such students.
Presently hostel messes are run only in H15 & H16 with mess workers. All
other hostels have contractor run messes. Thus in H1 to H14 the Mess
Establishment charge is effectively a mess advance.
The Mess Establishment Charge in the new rates applicable from 2017-
2018 is now uniform across all students irrespective of the hostel and is Rs
1500/- per sem.
 Notes on Medical Expenses
Medical Expenses of students (borne by Institute) are composed of
OPD expenses including medicines, tests etc provided by IITB Hospital (no cap)
Inpatient expenses for hospitalization in IITB Hospital (no cap)
Reimbursement of medicines & tests purchased from outside which are
prescribed by the Hospital (no cap)
Reimbursement of hospitalization (inpatient) expenses availed outside campus
- capped to 2 lakh per sem now (i.e. 4 lakhs per year); pre-increase 1 lakh per
sem (i.e. 2 lakh per year)
Fixed Medical Fees paid are effectively like a premium for internal medical
insurance provided by IITB
A good comparator for this is external health insurance. A recent
provisional quotation obtained by Dean SA for group medical cover
(Oriental Ins Co)
1. Sum Insured: Rs 2.5 lakhs per student :
Option-1 : Without co-pay : Rs. 4.17 cr plus ST
Option-1 : With 10% co-pay : Rs. 3.68 cr plus ST
2. Sum Insured: Rs 3.0 lakhs per student :
Option-1 : Without co-pay : Rs. 4.86 cr plus ST
Option-1 : With 10% co-pay : Rs. 4.29 cr plus ST
With 10000 students the above means Rs 4860/- + 18% GST per year without
OPD.
 Impact of non-tuition fees increase on Institute
Finances Comparison with Expenditure
Earlier Increased Total Total Fee Total Remarks
Rates Rates Fee (increased expen-
(earlier rate) Rs cr diture
rate) Rs
cr
Total Effective Fees 17752 34000 14.20 27.20 33.88 6000/- Mess Estab.
Charged per year Charges per sem treated as
H1 to H14 students. (14876 mess advance in earlier rate
6000) x by adjustment in Mess Bills.
2 Total students 8000 (2017).
increase ratio 1.91
Total Effective Fees 29752 34000 5.95 6.80 8.47 6000/- Mess Estab.
Charged per year Charges in old rate. Total
H15 & H16 students 2000 (2017)
students. increase ratio 1.14
Total 20.15 34.00 42.35 Net deficit Rs 8.35 cr after
increase which is about
20% of expenditure.
 Impact of increase in non-tuition fees
on students vs increase in stiipend

Increase in non-tuition fee Increase in student

per month from 2011 to stipend per month from
2017 2011 to 2017
UG students Rs 1354 Not applicable
PG Students (Mtech, etc) Rs 1354 Rs 4000
PG Students (PhD) Rs 1354 Rs 9000/Rs 10000
 Concluding Remarks
There is a need to increase non-tuition fees from the
Institute Finances perspective
The General Financial Rules of the Govt of India mandate
increased self-sufficiency in raising funds to supplement
MHRD grants
The increase in expenditure over the 6 years from FY 2010-
2011 (last fee increase) to FY 2016-2017 is close to 3 times
mandating an increase in fees.
Data presented show that even after the increase in the
non-tution fees, there will remain a 20% deficit (on the
basis of 2016-2017 expenditure)
The non-tuition fee increase is justified and is reasonable.