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Education is recognized as one of the critical elements of economic development. It enhances competence and capability of work-force. It enhances productivity in our society. It enhances optimal use of natural resources by increasing the technical and managerial efficiencies. It creates the environment in which a person can develop the inherent qualities present in him. Thus, adequate financing of higher education is a pre-condition for socio-economic development of our nation. At present, the system of higher education in India is facing a serious resource crisis. There is need to provide adequate financial support to the higher education system. The rapidly decreasing financial requirement for education since early seventies has created problem for the sector. The serious problem cropped up during the early 1990s, when higher education was described as a non-merit good for which the government had little responsibility of funding. The New Economic Policy has also affected the education policy in India. Privatization of education has started after GLPM.