This is a far more interesting question according to me.
Pranay Kotasthane

1.. Steps shouldn’t be taken with countering biased and uninformed perceptions as the aim. Steps should be taken to ensure what’s good in long term.

2. If engineers don’t do engineering, who do you attribute the major cause to? Individuals or the economy where there are no jobs for engineering?Vacancies in ISRO, BEML are only a minuscule fraction of the number of engineering graduates. For the amount that’s allowed, people do join. What about the rest? Even for the existing jobs in core engineering, very few are productive. Some PSUs make people do counting job in the name of engineering. The value addition to economy may be better if people work in in service sector than in some of these companies.

3. If we are going to tally funding to each project with only the returns on the stated aim of that particular project, then 99.99% of research projects seem useless and don’t deserve funding. This is not always the best way to measure the returns to education investments. It should be an overall calculation.

From that perspective, India got multiple times returns for what it spent on IITs, in terms of contribution to the economy, as said by many GoI reports. So, the question of money going waste doesn’t arise at all. Thus, tax payers are getting more than what they have paid for.

4. We might also have to rethink the purpose of undergraduate technical education. Education in this context consists of specific technical skills, aptitude to acquire skills, exposure and networks. In the absence of market for specific technical skills, these seem immaterial. The real value add of undergraduate education at IITs and NITs is in the other three categories — building aptitude to acquire skills, exposure and networks. In a ever changing world, these are more important than the static knowledge of specific skills. Seen from this perspective, the investment on education isn’t wasted, it’s building other valuable skills in people, necessary for economy.

In other words, in the Indian context, the investment being made is not on specific skills of engineering, but for contribution to the economy. It has to be thus judged on these metrics.

5. Scholarships is a complex thing. In a low income country like India, the limited paying capacity of families (considering that most of savings money is already spent in 1–12 education), low salaries compared to high cost of education (if made to pay full cost) should all be taken in to account while deciding the income limits for scholarship. If they are taken into account, the income level for scholarships would be high enough that virtually most people will get scholarships, barring few high end income people. As per Kakodkar report, even with 5 lakh income limit, 50–60% students fall under this category. If you increase a bit more, 80–90% will fall under the limit.

In fact, contrary to the perception, apparently fee hike has reduced revenues to IITs. It’s due to surge in income exemption certificates and the fact that institutes have to pay interest for the duration of the course.

6. Other countries leave it upon universities to raise funds only after giving them a significant threshold basic fund. We are no where near to reaching that threshold. Without even giving the threshold fund, we are asking universities to take care of themselves. This is plain wrong.

Leave alone giving funds, they are being cut down and universities are being asked to raise own funds. The planned budget for the 8 old IITs was 2500 crores in 2014–15, it is only 2000 crores for all 19 IITs taken together in 2015–16. The budgets are being cut midway. For instance, the granted planned budget of IIT Kanpur was 327 crore for 2014–15. To begin with, which government gives this ridiculously low amount of money to institutes aspiring to be world class? Leave that, by the end of year, 327 crore was reduced to 205 crores, with last 53 crores arriving on March 31st, 2015. This is not the way to build a quality institution.

Faced with this situation, they are asking for fee hikes. Now, when someone questions fee hikes, government is pointing to universities’ request for fee hike, indicating that universities wanted and it’s not the decision of government. IITs’ request to hike fee arose due to governments’ fund cuts. This fact is being concealed. This is cheap politics and deceit at best.

7. If anything, India should spend more on higher education and not less. There shouldn’t be scope for false dichotomies — spending on engineering vs. medicine, primary vs. secondary vs. higher vs. research etc. All these arise because of lack of will to spend, or lower total pool of money. Instead of trying to make painful transition of budgets from one critical sector to another critical, when all of them are already cash constrained, it is better if we focus energies on demanding the increase of total pool of money available. We can reserve demands to make governments save money, for other sectors where there is a lot of scope; not for sectors that are already cash strapped and are important necessary inputs to economy.

8. The logic of “only basic education should be free and not the rest” doesn’t apply to modern economies anymore. It was for those days of industrial revolution and decades after that, where one could get decent job with just school education. The situation is no longer the same.

Today, we have what the economists call “job polarisation”. The middle skill jobs are disappearing, creating a huge void between high skill and routine manual jobs. Either you are at bottom or at top. Decent jobs are only at top. There’s no scope of getting such decent job with mere basic school education. Higher education has become mandatory. Higher education (under-graduation) is thus what basic education was in last century.

We can ignore this at our own peril. If we want to adjust our economy to modern times, there’s no escaping from spending on higher education, including giving significant scholarships to students.

9. For the size of India, we should be having at least 100 significantly funded high quality undergraduate universities supplying good quality talent. We are nowhere close to that. Currently, only handful of these are significantly funded and are supplying good quality. Worse, funding is being cut down even to these now. The available funds are not enough even to construct student hostels, leave alone research infrastructure.

The others, even though they exist, suffer from severe budget constraints and autonomy issues. Autonomy should surely be given but it should be complemented with a threshold amount of money.

10. Finally, if any thing, this is the worst time for India to cut down scholarships, leaving burden on students.This is the time when entrepreneurship is picking up for first time in India, the pattern of shifting to US reversing, and the creative talents of people are being put to use. By constraining people’s ability to do this at this point of time, we may be killing many Olas and Zomatos, leave alone those who can’t pursue research career due to debt burden.

Developed countries with high formal employment can afford to constrain students with debts. Countries with low formal sector, that desperately need more entrepreneurs to create more formal sector jobs can’t afford to do that. Leaving a significant section of people with debt burden will hence significantly hurt the economy unless we are ok with saying that certain things are only meant for the privileged. Again, not everyone will become successful in creating formal sector jobs but the returns from few that become successful will pay off for the rest. We should keep those options open.