Separating funding from regulation is a long-pending reform in Indian higher education. Evaluate its likely impact on HEIs.

Since 1956 the UGC has both set rules for universities and paid them grants. A body that funds and also inspects can use money to pressure institutions. NEP 2020 tried to fix this with four separate verticals for regulation, accreditation, funding and standards [1]. The Viksit Bharat Shiksha Adhishthan (VBSA) Bill, 2025 puts this split into law: "neither the VBSA, nor its Councils will have any powers regarding funding to HEIs" [2]. The principle is sound, but the outcome depends on who funds HEIs instead.

Today:     UGC  =  rules + grants   →  grants become leverage
VBSA Bill: 3 Councils = rules   |   Ministry of Education = grants

Fig: Shift in the regulator's functions

Positive impact

• Ends the conflict of interest: grants can no longer be used to force compliance, so HEIs deal with the regulator only on standards [2].
• Sharper regulatory focus: a single-window, faceless, technology-driven system replaces multiple approvals from the UGC, AICTE and NCTE [3].
• Regulation by disclosure: public disclosure puts trust-based checks in place of grant-linked inspection [3].
• Policy coherence: it moves towards the separation of functions that NEP 2020 recommended [1].

Limitations and risks

• The reform is incomplete: the Bill creates only three of NEP's four verticals and sets up no statutory funding body [1].
• Funding becomes more discretionary: grants to centrally funded HEIs will flow through the Ministry of Education [1]. Without rule-based criteria, funding could become more discretionary rather than less.
• Autonomy is limited: the regulator needs the Centre's prior approval to let HEIs award degrees, and appeals go to the Central government, not a tribunal [1]. Separating funding from the regulator therefore does not separate it from the executive.
• Uncertainty for HEIs: with no named funder, institutions may face unpredictable grants, which could hurt long-term research planning.

Verdict On balance, the reform should help HEIs: it removes coercion through grants and lets regulation focus on quality. Its full benefit depends on a statutory, formula-based grants body as NEP 2020 envisaged [1], together with an independent appellate tribunal. With these safeguards, separating funding from regulation can increase institutional autonomy, help bring about the quality higher education that SDG-4 calls for, and support the goal of Viksit Bharat.