New Delhi: Realising that implementing Right to Education will need a mammoth outlay of Rs 1.74 lakh crore, HRD ministry has said the proposed National Education Finance Corporation should finance school education as well as government/local bodies to increase enrolment and improve infrastructure.

   As per the earlier proposal, NEFC was to finance only higher education but at the behest of HRD minister Kapil Sibal, funding of Right to Education and school education in general was also included as the mandate of NEFC.

   Sibal has now written to Montek Singh Ahluwalia, deputy chairperson, Planning Commission, stressing the need for a body like NEFC. The HRD ministry has projected that Rs 1.55 lakh crore would be needed by 2016-17 for higher education to achieve the target of 25% gross enrolment ratio. In case of school education, the projected cost towards civil works, teachers’ salary, child entitlements and teacher training would be Rs 32,000-Rs 36,000 crore annually.

   Sibal has argued that banks treat loans and advances to the education sector in the same manner as that for trade, industry or commerce sectors. Moreover, the repayment period for loans to educational institutions is the same as for “for-profit” concerns. But since education was essentially a “not-for-profit” sector, the existing system needed to be changed, he has argued.

   The mandate of NEFC will be to directly finance any educational institution recognised under law and finance any government or local body for increasing enrolment and retention. NEFC will also grant loans and advances to any scheduled public sector bank by way of refinance for establishment, development or promotion of educational institutions. An institute with 25% project cost coming through donations or contributions will get loan at concessional rates. Also, for setting up educational institutes in backward areas, loans would be cheaper.

   NEFC will have authorised share capital of Rs 20,000 crore with 5% of the capital earmarked as redeemable preference shares. Three-fourths of the initial issued share capital at the time of its establishment may be contributed by the Central government and the balance may be subscribed by development banks, PSU banks, GIC, LIC and other government institutions.