Neither public nor private: IIITs’s self-sustaining funding model

Neither public nor private: IIITs’s self-sustaining funding model Premium

In 1997, the Andhra Pradesh government, which was then a single entity, started a new experiment. They gave land for an institution, but then they backed off and didn't act like a typical overlord. This led to the founding of IIIT Hyderabad, which does not accept the idea of ‘private tyranny' versus ‘public bureaucracy.' It is now an example of a ‘for the public, of the public, and by the public' model, showing that autonomy is more than just a buzzword; it's a way to survive and thrive.

Management that is tough and hard to predict can stop many private foundations or trusts that run colleges and universities from making progress. On the other hand, government institutions can get stuck because of apathy or too much interference. IIIT Hyderabad took the middle road.

Dr. P. J. Narayanan, who used to be the director of IIIT Hyderabad, says that the Institution's Governing Council is made up of smart people who only care about the public good. The secretaries for Education and IT in the State government are on the board, but they don't have any special powers because the State doesn't give much money. The Board chooses its own Chair and Director through a search committee, but it does so according to UGC and government rules. This structure protects against both unwanted interference and the whims of private ownership.

The institute hardly gets any federal or State block grants; its motto is ‘fend for itself.' The financial model is a high-stakes equation: students pay tuition that covers the costs of running the school. In return, the institute wants to give its students a lot of value and results that make the money they paid worth it. The students get good jobs that pay well, which the students see as worth the money they pay, but this isn't stated in the Institute's overall view.

This continuous flow of value pays for all of the operating costs, keeping the lights on and the quality high. Different fields can use this model in different ways. Leadership acknowledges that this methodology may be challenging to apply in the social sciences; however, it has demonstrated efficacy in engineering and IT programs.

Premium institutions, such as IIIT Hyderabad, IIIT Bangalore, command high tuition fee of about ₹15 lakh plus for four-year UG programmes or the integrated PG programmes due to their specialised autonomous models. In contrast, top-ranked private universities like VIT Vellore and Thapar Institute offer more variable cost structures as people with higher merit pay lower and those lower down in merit list pay higher fee.

The difference here is the vast variation in intake strength. Private Universities have a much larger intake, running to several 1000s, which impacts the median salary packages (In terms of computing outcomes). IIITs in comparison have much smaller intake. They also have the highest outcomes both in salary packages or in research output, proportionately.

Dr. Narayanan says that IIIT Hyderabad isn't just a coding school; it's a “junction” where computer science meets the real world and people. It wants to make both the best technologies and the best technologists. The institute combines IT with not only specialised engineering but also the sciences, structural engineering, the humanities, and linguistics. In a ‘computational human science' group, people who study the humanities work with people who write code.

This interaction between different fields has led to national projects like the Bhashini language mission and the creation of deep-tech startups that make everything from 360-degree cameras to flexible drone systems to generative AI platforms.

Some of the most notable companies that have come out of IIIT research are Dreamvu (which makes 360-degree images), Arka Robotics (which makes flexible drone technology), and SyncLabs (which makes generative AI applications).

This way of bringing together different fields goes beyond just working together on research. The institute has purposefully grown its portfolio by adding undergraduate programs, doctoral research tracks, and executive education programs. These programmatic expansions are now very important to the institute's financial model. IIIT has reduced its reliance on any one source of income by offering a wider range of learning options beyond just one type of credential. This has attracted a wider range of students who are willing to pay for education at different prices and lengths.

The school is now pushing the limits of its physical space. The master plan is to double the number of students from 2,000 to 4,000 by 2033. But it's not cheap to make excellence bigger. The cost is ₹300 crore to get 250 faculty members and the right infrastructure, which includes 1,200 to 1,300 new hostel beds.

How do you get these funds without help from the government? You use your legacy to your advantage. The institute is borrowing money to build, but it plans to pay it back with community strength. The leaders are counting on their alumni network to bring in more than ₹15 crore a year in donations, which could cover 60 to 80 percent of the loan EMIs.

The IIIT Bengaluru is another example of how well this tuition-based model works. The institute has been around for 25 years and doesn't rely on the same kinds of grants that other schools do. Instead, the school relied on a mix of tuition, support from businesses, and donations from former students. This made them rely on themselves, which turned out to be a strategic advantage. The model showed that an institute could survive without government funding if it had a mix of tuition income, partnerships with businesses, and support from the community.

Prof. S. Sadagopan, founding Director of IIIT Bengaluru, says that this method's scalability shows that there are important sector-specific limits. Information technology programs don't cost a lot of money to start up; they mostly need computers and networking equipment. On the other hand, the biosciences and biotechnology fields need a lot more money for lab equipment, building maintenance, and specialised infrastructure. These differences help explain why IT-focused schools can more easily become financially independent through tuition-based models. Other scientific fields, on the other hand, have a harder time repeating this success.

The IIIT Hyderabad model is very Indian in how it works, but it does have some similarities to institutional autonomy frameworks that have developed around the world. In the United States, the academic ecosystem is based on certain historical legal terms that come from the Morrill Act of 1862. In the U.K., ‘land-based' colleges serve similar purposes, but they don't have the same constitutional roots. These global models stress the idea that institutions built on land given by the public should work for the public good, even when they need to be financially independent.

It is very important to understand the difference between legal designation and functional purpose in order to see why models like those of the IIITs in India—operating on government-given land with public interest governance but without public funding—are truly innovative. It takes the public-interest imperative from land-grant traditions and the financial self-reliance mechanisms that are usually linked to private institutions.

The IIIT Hyderabad model shows that institutional independence, financial stability, and public accountability can all work together. The institute has created a model for higher education institutions that want to break free from both bureaucratic control and private capture. They did this by maintaining enlightened governance, striving for disciplinary excellence, embracing interdisciplinary innovation, and using community investment. It's still unclear if this model can be used by schools in other fields or areas, but its success in the IT and engineering fields suggests that the future of Indian higher education may not be about choosing between public and private, but about coming up with new ways to combine the best of both.

(K. Ramachandran, a journalist turned entrepreneur, writes on higher education, education policy, skilling and talent development.)

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Published - January 12, 2026 03:31 pm IST

Hyderabad / engineering / engineering colleges

Source: TheHindu
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