• First, it develops a theoretical perspective about the role of higher education institutions (HEI) in economic growth and social progress. The aspects of inter-relationship between higher education and national development are discussed in detail against the backdrop of relevant evidences. Since the impact of promotion of HEI’s on the societal development is positive and negative as well, they ought to be nurtured with great care and caution. The areas and forms of do’s and dont’s indicated. • Second, in the backdrop of theory of public finance of social services like education, it discusses the mechanism of financial allocation by the Central and State Governments and demonstrates inter-alia the extent of dependence of different types of universities on the Government, sources and methods of resource mobilization by HEIs, inter-state variations in educational efforts and the degree of burden shared by the Centre, the States and beneficiary groups in financing higher education. The presentation is based on times series data at all India levels as well as cross- sectional data for a number of major universities in India. • Third, it presents a detailed account of the factors that determine expenditure on higher education. In essence, it empirically examines the pattern of growth and utilization of expenditure. The analysis lend perspective on the extent of under or over investment in higher education and indicates areas that are to be scruitinised for efficient utilization of resources. The appropriate measures for minimising allocative inefficiency so as to improve financial accountability of HEIs are also discussed. • Fourth, it carries out an exercise on unit costs of higher education and shows the extent of variations in costs of comparable programmes offered by variations in costs of comparable programmes offered by different universities. As a tool for ensuring cost effectiveness of various courses of study, it indicates the areas and directions for effecting economies of scale and/or effective utilization of resources. • Fifth, it attempts to translate the prevalent policy on higher education into financial terms. On the basis of the projected enrolment, policy stipulation and per student costs of higher education, the financial requirements upto 2000 AD have been worked out. Thus, it indicates not only the magnitude of financial needs for implementation of the policy in the current Eighth Plan but offers a practical methodology for undertaking such exercises by the planners and decision makers. (Continued on next flap) • Sixth, with a view to improving performance and accountability of HEIs it outlines alternative approaches of distribution of resources among HEIs. The limited funds should be distributed on the basis of valid performance criteria that should take into account such factors as quality and relevance (or cost-effectiveness) of programmes, manpower requirement of development sectors, extent of utilization of facilities by university departments and ability of learners to benefit from university education. The methodology of performance linked criteria of funding has been explained. • Finally, it recommends a set of fiscal measures for effecting economy in expenditure as well as for mobilization of additional resources from various internal and external sources such that the burden of financing higher education is duly borne by the beneficiary groups. Thus, the book presents a comprehensive analysis of costs and finance aspects of higher education and develops perspective for evolving a sound fiscal policy for the development of higher education.