The ambitious plans of the Indian human resource development ministry to set up new institutions of higher learning like IITs and IIMs and expand infrastructure for the benefit of Other Backward Classes are likely to suffer with Planning Commission deciding to cut the allocation for higher and technical education in the Budget 2007-08.

Though the Commission had promised Rs 5,500 crore (Rs 55 billion) for this purpose, it is understood that it has now slashed it down to Rs 4,300 crore (Rs 43 billion). The ministry's original demand was for Rs 8,000 crore (Rs 80 billion).

As a result of the cut, states like Bihar, Rajasthan and Andhra Pradesh might have to wait for an Indian Institute of Technology while plans for a new Indian Institute of Management in Shillong and over a dozen Indian Institutes of Information Technology might be delayed.

The reduction in allocation is also likely to tell upon aided institutions desirous to expand their infrastructure to accommodate OBCs as per the new law which gives three years time to implement the 27 per cent reservation for them in aided institutes of higher learning.

The Oversight Committee which went into the task of preparing a roadmap for the implementation of OBC reservation had said that Rs 17,270 crore (Rs 172.70 billion) would be required over the next five years to implement the new reservation policy.