The University of Madras is grappling with a severe financial crisis, impacting its day-to-day operations, salaries, and other crucial expenses, income tax issues, lack of government grants, and alleged government neglect. This fate came to the varsity primarily due to an alleged failure to pay income tax and subsequent freezing of bank accounts by the Income Tax (I-T) department.
The university is currently under the leadership of a four-member convenor committee, with the higher education secretary serving as the chairman in the absence of a vice-chancellor and is facing a substantial income tax liability of ₹424 crore for the period from 2017-18 to 2021-22. The I-T department has frozen 37 bank accounts due to alleged nonpayment of tax dues. The university is required to pay ₹20 crore immediately to lift the freeze, an amount it cannot afford.
The university is reportedly incurring monthly expenditures of ₹20 crore, with a major portion allocated to salaries and pensions. Despite the total expenses being around ₹240 crore and revenue reaching around ₹100 crore, the state government has allocated only a small amount annually since 2015-16, citing audit objections. The frozen accounts are causing financial strain, leading to bounced cheques and the potential risk of a complete power outage if electricity bills are not paid. The financial crisis is affecting salaries, pensions, fellowship, and scholarship dues, impacting employees, pensioners, and students.
The university, which is supposed to be exempt from income tax if it receives over 51% of its revenue as grants from the state or central government, has not received grants from the Tamil Nadu government since 2017. Consequently, the I-T department considers it a private institution and imposes a hefty tax.
University officials attribute the financial crisis to government neglect and corruption over the years. Audit objections have hampered the university’s ability to secure grants, and the absence of a full-time auditor worsens the situation. The Joint Action Committee of the University of Madras Professors and Officials Welfare Associations is expressing concern and organizing protests, including a one-day token hunger strike, to draw government attention to the issue. They highlight the state government’s significant funding cuts, leading to a severe financial crisis.
Against this backdrop, TNIE reported that the state government has declined to offer direct financial aid and is considering seeking legal counsel to provide an undertaking to the Income Tax (I-T) Department in an attempt to unfreeze the bank accounts of the University.
On 27 February 2024, an urgent meeting was called by the state government to address the financial crisis at the University of Madras. Following their participation in the meeting, representatives from the joint action committee, which includes teaching and non-teaching staff, stated that the state government rejected immediate financial assistance. Instead, the government suggested that the university appeal the I-T department’s demand to pay ₹424 crore in dues. The university’s financial situation worsened as ₹12.5 crore was deducted from its frozen accounts.
After deliberations during the meeting, university sources expressed their intention to seek legal guidance on providing an undertaking to the I-T department. This involves proposing to pay 20% of the demanded amount in installments. A committee member disclosed that I-T officials had requested the university to commit to paying 20% of the demanded tax amount in subsequent months to unfreeze the accounts.
Subsequently, the university would be able to file an appeal against the payment demand. Despite the joint action committee’s plea for the government to cover salaries due in the next two to three days, there are reports that the state government has refused to provide financial assistance. If the state government continues to withhold funds, the university may be forced to tap into its corpus (once unfrozen), which holds over ₹300 crore, generating interest used for pensions. However, relying on the corpus fund is considered a temporary solution, and the university would only be able to manage for a limited period with the available amount.
Ensuring the university’s long-term financial stability will undoubtedly require support from the state government. Despite current audit objections amounting to approximately ₹6 to ₹7 crore, sources allege that the state government has been reducing funding by over 75% in recent years.
Officials from the higher education department disclosed that the primary focus of the meeting was deciding how to disburse this month’s salary. They anticipate making decisions on the university’s financial situation in the next two to three days.
In the meantime, educators are urgently calling on the state government to intervene. Prince Gajendra Babu, the general secretary of the State Platform for Common School System, has launched an online campaign urging the higher education minister to announce grants to “Save the University of Madras.” Founded 166 years ago, the University of Madras, renowned for nurturing six former Presidents and two Nobel Laureates, currently finds itself in a dire financial predicament.
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