The best universities in India, those that we are particularly proud of, are not well rated by international standards. The Times of London’s Higher Education Supplement ranks universities around the world. In 2008, their data showed IIT Delhi at rank 154 and IIT Bombay at rank 174 globally. No other university in India made this top 200 list. By way of comparison, China has universities at ranks 50, 56, 113, 141, 143 and 144. In other words, China has six universities which are superior to IIT Delhi and IIT Bombay.

Last week, the NBER Digest carried an article by Linda Gorman summarising a research paper by Philippe Aghion, Mathias Dewatripont, Caroline M. Hoxby, Andreu Mas-Colell and Andre Sapir which investigates the sources of success in building universities. The paper is immensely useful in thinking about how to build universities in India; it should be on the top of Kapil Sibal’s reading list.

The paper finds that the first element that pulls down the rank of a university is the process of budgetary approval from the government. The average European university that sets its own budget has a rank of 200 while the average European university that needs approval from the government has a rank of 316. In other words, giving a university autonomy to set its own budget on average yields an improvement of 116 ranks. The message for India: in order to obtain high-quality universities, we need to give universities autonomy.

The second important feature is the role of government in funding universities. They find that each percentage point of the university’s budget that comes from core government funds reduces the rank of the university by 3.2 points. The message for India: in order to obtain high-quality universities, we need to give them less money through core funding from the government.

... contd.