The third issue is inequality in wages. European universities which pay the same wages to all faculty of the same seniority and rank have an average rank of 322. Universities which vary wages for each faculty member and pay different salaries to two people of the same seniority and rank, have an average rank of 213. In other words, flexible HR policies yield an improvement of 109 ranks. The message for India: freeing up HR policies is essential to building high-quality universities.

The fourth issue is the recruitment process for students. Universities which are free to recruit undergraduate students as they like have a rank 156 points higher than those where the government determines the composition of students. The message for India: universities should have full freedom to recruit students as they like, without interference from the government.

The fifth issue is competition. Each percentage point of a university’s budget that comes from a competitive research grants process yields an improvement in its ranking by 6.5. The message for India: the “core funding” money that is taken away from universities should be turned into a competitive process through which a panel of Nobel laureates choose which universities are the most deserving for getting research funding. Defence, space and atomic energy contracts are also ideal sources of meritocratic research funding, because these customers care about results and will not throw money towards a process of political patronage.

Variation across state governments in the United States shows that the best universities come up in states which allow more autonomy, such as independent purchasing systems, no state approval of the university budget, and complete control of personnel hiring and pay.

... contd.