Performance-based funding for state universities from academic year 2026-27

In a bid to enhance quality and improve accountability, the higher education department will introduce a Performance Incentive Grant system for state universities from academic year 2026-27.

As part of the system, a total of Rs 175 crore has been allocated as performance incentives, over and above a block grants allocation of Rs 767 crore for the state universities in this year's interim budget. Out of the 13 state universities functioning under the department, the system will be applicable to all except Annamalai University, which came under state government in 2013.

The initiative marks a shift from traditional funding to a performance-driven approach focusing on accountability, fiscal discipline and academic outcomes.

On the system, MP Vijayakumar, vice chairman, Tamil Nadu State Council for Higher Education (TANSCHE), said, "We have already shared the details of the parameters with the state universities and they have been asked to submit all authentic data. We will verify the data and send the performance report to the higher education department."

According to GO issued in this regard on February 13, 2026, the Performance Incentive Grant will be awarded based on a weighted evaluation system. The evaluation criteria are divided into two major components: Fiscal Discipline (40%) and Academic Excellence (60%).

Fiscal discipline parameters include timely settlement of audit objections raised by the local fund audit department. To ensure financial transparency, universities must settle long-pending audit objections. Only objections from the preceding two financial years are permitted to remain open. Furthermore, universities are now required to maintain a separate corpus for pensionary benefits and adopt a Model Procurement Policy to prevent financial leakages.

As for the academic performance component, it will be assessed through multiple indicators such as implementation of e-governance in student services, maintenance of a comprehensive institutional database, and reforms in examination systems with a focus on higher-order and application-based questions.

This is the core aim of the reform, focusing on research, student outcomes and global competitiveness. Points will be awarded for the number of Scopus-indexed publications, patents granted and research projects funded by international bodies. A significant 30% of the academic weightage is tied to introducing Higher-Order Thinking (HOT) and application-oriented questions in semester exams for both university departments and affiliated colleges.

Additionally, research output plays a key role, with the metrics including PhD completion rates within stipulated timelines and the percentage of students receiving research fellowships such as JRF and institutional grants. These measures aim to strengthen research culture and improve student engagement in innovation.

The government has also introduced strict monitoring, and penalty provisions, including reduction or suspension of grants for non-compliance and financial irregularities.

The department has revised block grant rules as well. To qualify for the block grant, universities must fulfill six mandatory conditions now. These include recruitment of teaching and non-teaching staff through the Teachers Recruitment Board and the Tamil Nadu Public Service Commission, adoption of an Accrual-Based Accounting System (ABAS), implementation of e-office systems, adherence to government procurement policies, periodic revision of student fees every three to five years, and compliance with tax and labour regulations.

"The institutions will get funds only after meeting specific benchmarks verified by the local fund audit department and TANSCHE," a higher education department official told TNIE.

(The story was written by Binita Jaiswal)