ABSTRACT:
This study investigates the relationship between financing patterns and institutional
performance in Indian higher education institutions (HEIs) from 2005 to 2015. Employing a
fixed-effects panel regression model on data from 102 HEIs drawn from the All India Survey
on Higher Education (AISHE), the study examines how government grants, tuition revenue,
and private endowments influence key performance indicators—graduation rate, student–
faculty ratio, and research output. The analysis reveals that government funding and private
endowments have a significantly positive impact on institutional performance, while overreliance on tuition revenue is associated with resource strain, particularly in faculty staffing.
Notably, private endowments exhibit the highest marginal impact on research productivity,
and a statistically significant interaction between public and private funding suggests that a
blended financing model yields optimal outcomes. These findings contribute to the limited
body of empirical research on Indian higher education financing and offer strategic insights
for policymakers, advocating a shift toward hybrid funding structures. The study bridges a
critical literature gap by applying econometric methods to assess the causal dynamics
between financial sources and institutional effectiveness over time. It also emphasizes the
importance of diversifying funding streams to balance access, quality, and sustainability in
higher education. The results have implications for national policy, especially in the context
of performance-based funding models under India’s evolving education reforms.
Keywords: Higher education financing, institutional performance, fixed-effects regression,
Indian universities, public grants, private endowments