BELAGAVI: The Karnataka government’s request to Visvesvaraya Technological University (VTU) to provide Rs 250 crore to developya College of Engineering (UVCE) in Bengaluru has triggered a debate over how the university’s accumulated funds should be used.
The government has sought a portion of the money currently held by VTU, which has around Rs 610 crore in its accounts after the Income Tax Department returned funds. However, the VTU administration has reportedly declined the request, saying the money is being preserved to meet the university’s long-term financial needs.
Chief Secretary Shalini Rajneesh is learnt to have written to VTU Vice-Chancellor Prof. Vidyashankar, requesting Rs 250 crore for development activities at UVCE. The request has drawn attention because VTU itself is a state-owned technical university and receives limited regular financial support from the government.
VTU’s accounts have a long history. In 2014, the Income Tax Department searched the university over issues related to tax payment and exemption. The action reportedly led to the seizure of around Rs 400 crore.
VTU later maintained that it was entitled to tax exemption as a government-owned educational institution. The university submitted several documents to the Income Tax Department, including an application relating to registration under Section 12A of the Income Tax Act, along with other records supporting its claim for exemption.
After examining the documents and the university’s submissions, the Income Tax Department returned the seized amount to VTU with accumulated interest. The amount returned eventually reached around Rs 610 crore, according to information available from the university administration.
The university is also reportedly awaiting the release of another approximately Rs 90 crore from the Income Tax Department in connection with the matter.
The government’s request for Rs 250 crore came after the university returned the funds to VTU. However, the university’s governing body decided not to accept the proposal. The administration has argued that retaining the funds is important to ensure the institution’s financial stability and meet future expenditure commitments.
A substantial portion of the available money has already been placed in fixed deposits. VTU Vice-Chancellor Prof. Vidyashankar has reportedly kept around Rs 500 crore in fixed deposits, with the interest earnings intended to support the university’s recurring financial requirements in the coming years.
According to the university, the interest generated from the fixed deposits could help meet expenses such as salaries and other institutional commitments. The strategy also aims to ensure VTU remains financially sustainable during periods when regular government grants are inadequate or delayed.
The university’s decision matters because higher educational institutions often face recurring expenditure pressures, particularly on salaries, infrastructure, academic activities, research, and administration. VTU, which has a large network of affiliated engineering colleges across Karnataka, also has continuing financial obligations.
Meanwhile, the government has sought funds to develop UVCE, one of Bengaluru’s prominent engineering institutions. The proposal indicates the government’s interest in mobilising available resources for infrastructure and educational development within the state.
The request has therefore raised questions about whether funds held by one government institution can be used to develop another institution, and under what legal and financial framework such a transfer could be made.
The issue also highlights the contrasting financial priorities of the government and the university. While the government appears to be seeking additional resources for a major educational infrastructure project, VTU views the returned funds as a long-term financial reserve whose interest can support its own operations.
The university administration’s decision not to part with the Rs 250 crore means the government will have to consider other funding arrangements for the proposed UVCE development works unless VTU subsequently changes its position.
