Policy Update
Diva Bhatia
The Ministry of Social Justice and Empowerment initiated the plan in 2017 for the purpose of eliminating any financial barriers for able students from the Central List of Other Backward Classes (OBCs), who are Economically Backward Classes (EBCs) families earning not more than ₹8 lakh in annual income (Ministry of Social Justice and Empowerment,2017). The scheme provides the credit to cover the interest on education loans disbursed during the term of the moratorium—that is the entire period of eligibility for a full-time Master’s, M.Phil., or Ph.D. program (and up to one additional year once graduated, or until the borrower gets a job; whichever occurs first) so that recipients can focus on their studies without needing to think about repayment. In this way, Ambedkar Interest Subsidy Scheme (ACSIS) is together with scheduled nodal banks operating under the Indian Banks’ Association (IBA) Education Loan Scheme, extending wider access for foreign educational opportunities for students from socio-economically challenging backgrounds (Government of India).
ACSIS is funded by specific public and private banks that have been designated as nodal banks as per MoSJE notification. This “funds limited” program subsidizes the interest on loans approved only for full-time postgraduate or doctoral studies at approved foreign institutions during the moratorium period. Once the moratorium period elapses, the responsibility of repaying the interest shifts to the borrower. In order to apply, the borrower shall need to provide current proof of admission to an approved university abroad, letter of loan approval that meets IBA norms, OBC caste certificate (where applicable), income certificate (for EBC), and proof of family income of less than ₹8 lakhs. The program acknowledges that at least half of the annual allocations will be reserved for female students with emphasis on honoring gender inclusion. The allocation of funds is regional and occurs at the start of every fiscal year. After the funds have been fully distributed in a region during the fiscal year any additional applications will need to reapply to the new budget year. A quarterly Recommendatory Committee (chaired by the Joint Secretary (Backward Classes Division) and including representatives from the Finance Division and nodal banks) meets during the quarter and reviews all applications to check eligibility documents before the committee approves interest subsidies (My Scheme). Applications not funded when the regional allotment limit is fully disbursed will have to wait until eligible expenses are included within the next year’s budget .
Performance
Quantitative data from parliamentary replies and press releases indicate a continued upward trend in both counts of beneficiaries and amounts paid out in total under ACSIS. While ACSIS-only data for FY 2020–21 are not published separately, the overall SHREYAS program (which includes ACSIS and the National Fellowship for OBCs) noted that in FY 2021–22, there were 8,348 beneficiaries, up substantially from about 700 in FY 2020–21, signalling increased demand for overseas scholarships among OBC/EBC students. Under the ACSIS program alone, in FY 2022–23 there were 4,159 beneficiaries, and disbursements of ₹48.09 lakh, compared with 1,570 beneficiaries and disbursements of ₹18.5 lakh in FY 2021–22. Moving to FY 2023–24, the scheme’s financial commitment was ₹3,748 lakh (₹37.48 crore), and supported 2,752 students across the country. The relative decrease in beneficiary counts, alongside magnificent increase in total outlay, suggests that increased subsidy per student, stemming from inflationary pressures on tuition fees and interest rates abroad, led to messier growth in outputs. Female participation has remained steady to near 50 percent, with nearly half of all ACSIS recipients in recent rounds (Press Information Bureau, 2023).
Qualitative outcomes emphasize transformational impacts at the grassroots level. One case study reveals how a rural Other Backward Class (OBC) student from Uttar Pradesh used ACSIS as an opportunity to pursue a Master’s in Environmental Engineering in Germany, since the moratorium allowed her time to devote towards research and publications. After her degree with distinction she gained a research fellowship and now works with Indian NGOs in sustainable water management. Stories from other states, Bihar and Tamil Nadu, relate similar experiences about former scholars of the ACSIS scheme returning to India as knowledge ambassadors, implementing community local development projects and working with peers through mentorship (Press Information Bureau, 2023). These stories present a clear social return on the scheme and demonstrate that youth interest relief can produce increased employability and community level development.
Emerging Issues
Despite its successes, ACSIS faces several operational challenges.
First, the “funds-limited” design means that eligible applications submitted in the second half of a fiscal year often await the next budget cycle. In FY 2023–24, candidates admitted to later-start programs (e.g., spring or autumn intakes in North America and Europe) were deferred en masse when regional allocations depleted prematurely, forcing some to seek alternative financing or defer enrollment.
Second, uptake remains disproportionately high in metropolitan and tier-1 states (e.g., Uttar Pradesh,Uttar Pradesh probably does not fall under tier-1 states, kindly re-check thisMaharashtra) while northeastern and certain tier-2 regions lag, highlighting persistent awareness gaps. Many eligible families in remote districts remain unaware of nodal bank branches or scheme modalities, contributing to uneven geographical distribution of benefits (Ministry of Social Justice and Empowerment).
Third, documentation bottlenecks persist. Incorrect or outdated income and caste certificates—often issued without standardized formats by local authorities—lead to frequent application rejections and processing delays. Consequently, students face heightened stress as admission deadlines approach. Fourth, ACSIS’s coverage of interest alone does not address rising tuition, living expenses, visa fees, or insurance costs (State Bank of India,2018). Post-pandemic inflation and currency volatility have led some ACSIS-eligible students to downgrade or abandon international applications, particularly for North American and Western European programs.
Finally, rigid eligibility rules exclude many accredited online and hybrid programs—despite established rigor and recognition—denying flexibility to students who prefer or require non-traditional delivery models .
Way Forward
To strengthen ACSIS’s impact and expand its reach, a multipronged strategy is needed. To begin with, MoSJE shall create a mid-year review mechanism to consider reallocating unspent funds toward regions exhibiting high demand. Establishing a small contingency corpus (about 5 percent of the annual ACSIS budget), the Ministry can mitigate deferments and prevent late-cycle applicants from losing access. Second, further outreach through state social welfare departments, district collectors, and higher education institutions—through workshops, roadshows, and digital campaigns in regional languages—would help address awareness disparities in rural and Tier-2 areas. CSCs and Mobile Vidhya Kendras could be leveraged to facilitate person-to-person counseling in far-flung districts (Ministry of Social Justice and Empowerment).
Third, documentation procedures might be streamlined through a single online portal connected with Aadhaar-backed caste and income databases for faster verification. By linking with state revenue and social welfare records, the system could do away with the physical presentation of certificates, limit manual errors, and permit real-time status updates. Immediate notifications for missing/expired documentation would help students fix the problem before deadlines for admissions. Fourth, the scheme guidelines for ACSIS should be reviewed on an annual basis to establish eligibility for accreditation of online and hybrid Master’s and Ph.D. programs recognized by foreign quality agencies (for example, U.S. Department of Education, U.K. Quality Assurance Agency). Such flexibility will help keep the scheme abreast of shifting footholds in global education to help students balance costs and logistics effectively.
Fifth, client counseling must be mandatory and thorough. Joint sessions before sanctioning by MoSJE officers and the nodal officers of the bank would explain the interest subsidy, how repayment takes place after the moratorium, and cost estimates (tuition, living expenses, and related costs). Including a brief financial literacy module would aid with responsible borrowing and reduce the risk of default (State Bank of India). Finally, an effective monitoring and evaluation mechanism must be put in place, where independent agencies are commissioned every two years to review quantifiable data (employment outcomes, repayment rates) and conduct interviews with beneficiaries to generate valuable insights. These evaluations can feed into policies to keep ACSIS responsive to socioeconomic transformation and carry on Dr. Ambedkar’s legacy of educational empowerment and social justice.
References
About the Contributor:
Diva Bhatia is a research intern at IMPRI and currently pursuing a major in Political Science from Jesus and Mary College, University of Delhi. Her research interests include gender studies, international relations and exploring the socio-political intricacies of North East India.
Acknowlegement: The author sincerely thanks Ms. Aasthaba Jadeja and the IMPRI team for their valuable support.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
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