20.1 Bare Act Provision
17. Budget.—The Commission shall prepare, in such form and at such time each year as may be prescribed, a budget in respect of the financial year next ensuing showing the estimated receipts and expenditure, and copies thereof shall be forwarded to the Central Government.
20.2 Explanation
The Commission must prepare a budget showing the estimated receipts and expenditure. The Fund defined in Section 2(c) is the basis for this budget. It ensures that the UGC remains financially accountable to the government by keeping its resources in a regulated, identifiable Fund. It is true that under section 17 of the Act, the budget prepared by the Commission is sent to the Central Government so that the Central Government may obtain vote of the Parliament for that expenditure. Nevertheless, in the eye of law the UGC is different from the Central Government.[1]
Section 17 explains how the UGC prepares and handles its annual budget. Every year, the UGC must create a detailed budget plan for the upcoming financial year. This budget shows two main things firstly about all the money the UGC expects to receive and secondly all the money the UGC plans to spend on its functions, such as giving grants to universities, running inspections, maintaining standards, research promotion, staff salaries, office expenses, etc.
The budget has to be prepared in a specific format and at a specific time each year, as decided by the rules made under the Section 25 of the Act. Such rules are made by the government. Once ready, the UGC sends copies of this budget to the Central Government. This allows the government to review the UGC’s financial plans, ensure they align with national priorities for higher education, and decide how much funding to actually provide through parliamentary approval.
This process keeps everything transparent and accountable. The UGC cannot spend freely without planning and it must forecast needs in advance and get government oversight.[2] This way, public money used for university development is properly estimated, justified, and controlled, preventing misuse while supporting coordinated growth in education across India.
20.3 Critical Analysis
Procedural Delay: The budget preparation process is a significant source of administrative lag, primarily due to the Bottom-Up data collection requirement. To prepare an accurate estimate of expenditure, the UGC must ideally collect requirements from hundreds of universities.[3] Delays in universities submitting their Plan and Non-Plan requirements lead to a rushed or inaccurate UGC budget. The phrase at such time each year as may be prescribed ties the UGC to the Ministry of Finance’s circulars. If a university develops an urgent research need somewhere in year after submission of budget, it cannot be reflected in the financial year next ensuing budget, forcing the institution to wait for the supplementary grant cycle. The subsequent negotiation between the UGC and the Ministry of Education and then the Ministry of Finance, often results in significant cuts to the estimated expenditure, causing a delay in the notification of sanctioned grants to universities.
Constitutional Validity and Ultra Vires: Section 17 ensures that the UGC operates within the constitutional framework of fiscal accountability. This section is the statutory bridge to Article 112 of the Constitution i.e. Annual Financial Statement. The UGC’s budget eventually becomes a part of the Demands for Grants of the Ministry of Education. The statutory bodies must prepare budgets that are realistic and aligned with their primary objective.[4] In this case, the maintenance of academic standards is the statutory primary objective of UGC. If the UGC includes items in its budget that fall outside the Functions defined in Section 12, the Central Government has the power to strike those items as ultra vires of the Commission’s mandate, thus UGC cannot fund for any political events. But now a days UGC had become tool of enforcing political agenda of parties in center. Burning example is UGC Equity Regulations of 2026, alleged of enforcing caste politics in college campuses.
Room for Misinterpretation: The term in such form provides the government with a tool for Regulatory Capture. The prescribed form may prioritizes accounting heads such as salaries, travel, stationery over academic outcomes such as research impact, student equity. This allows for a misinterpretation of the UGC’s health; a Commission might look financially sound on paper because it spent its salary budget, while its primary function of promotion of research remains underfunded.[5] If the UGC overestimates internal receipts, the Central Government might reduce its grant, leading to a mid-year liquidity crisis if these receipts do not materialize.
Colonial Era Policy and Irrelevance: Section 17 of UGC Act is rooted in the Line-Item Budgeting system of the British Raj, which is increasingly viewed as an obstacle to modern educational governance.[6] The colonial intent was to ensure that Native educational bodies could not spend a single rupee without the prior view of the Central Government. Section 17 maintains this oversight, preventing the UGC from becoming a truly autonomous Endowment-led body. Since 2005-06, India has moved toward Outcome Budgeting i.e. measuring what was achieved, not just what was spent. Section 17, written in 1956, still focuses on the Input model i.e. Receipts and Expenditure. This makes the statutory language of Section 17 archaic compared to modern Ministry of Finance requirements. University research typically operates on 3-to-5-year cycles. Section 17’s insistence on an annual budget is a colonial relic that forces researchers to fit long-term scientific breakthroughs into a 12-month accounting window, often leading to spending for the sake of spending before the year ends. Why we are still following these colonial relics which are irrelevant now.
[1] Bar Council of India v. Saveetha Institute of Medical and Technical Sciences & Others, Madras High Court – W.A.No.929 and 933 of 2006
[2] “Governance in Higher Education: Hand Book for Vice-Chancellors”, University Grants Commission, October 2019
[3] “Guidelines For General Development Assistance To Central, Deemed And State Universities During XI Plan”, University Grants Commission
[4] “State Finances Audit Report for the year ended 31 March 2021”, Comptroller of Auditor General
[5] “Research Funding Council for Major and Minor Research Projects during the Tenth Plan Period” University Grants Commission
[6] “Governance and Management of Higher Education Institutions in India”, Garima Malik, Centre for Policy Research in Higher Education (CPRHE)
