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Will India get the $1-billion university?

Last updated on: March 06, 2009 12:55 IST

Indian mining magnate Anil Agarwal is having a tough time giving away a billion dollars. He's pledged $1 billion to start a university along the shores of the Bay of Bengal in eastern India's Orissa state. The grand plan for a 6,000-acre campus looks to Stanford University in California for inspiration.

Leading academics would be poached from every corner of the globe. Research centers in bio- and nanotechnology, crop genetics and alternative energy would produce important work. His ultimate dream: When every building is completed and every classroom filled, 100,000 students will be enrolled, making it one of the largest universities in the world on a single campus. A more realistic goal is 10,000 students in the first eight years and double that in the next four. Ground-breaking is expected this month.

No one doubts that India needs more universities. And this would be the country's most comprehensive, with medical, engineering and business schools all on one campus. But Agarwal's plan is under attack on all sides. Critics say there is too much secrecy surrounding the land purchases, and they don't understand why he needs so much land. They point to 18 villages that are in the way--7 will be displaced completely--and water supplies that will be depleted.

In November a mob armed with sticks broke up a prayer service to start construction on a highway to the campus, attacked the attendees and damaged some of the construction equipment. The protests have set back the project by two and a half years. What's more, government approvals have either already expired or been held up.

At the same time Agarwal's company, Vedanta Resources, is under fire for its mining operation 250 miles away on the other side of Orissa. Its attempt to mine bauxite will destroy the ecology there and force out a tribal community, environmentalists claim. In January tribal members formed a 10-mile human chain in protest.

Given all this, even the four academics planning the university are wary of becoming too deeply involved in the project until a clear line is drawn between the university and the company. Agarwal is in complete agreement, but the legislation to formalise that is being held up.

Agarwal, 55, built his fortune through London-listed Vedanta, which operates in India, Australia and Zambia, and mines copper, aluminum, zinc and iron ore. He owns 55 per cent of the company and with the crash in commodity prices, he has seen his net worth plunge from $7.4 billion in November 2007 to $2.4 billion last November. He hasn't wavered in his philanthropic commitment, though. He still says he will donate 75 per cent of his wealth to the Anil Agarwal Foundation, and the money for the university will come from this. He's already transferred $250 million to the foundation for the project, but won't say how much he's spent on the land and the other costs so far.

Agarwal's pet cause has always been education, though he didn't make it to college himself. He credits his father, Dwarka Prasad Agarwal, with the idea of building a university. "My father (who didn't go to college either) reads a lot," he says. "He told me that great higher education was fundamental to where the US is today. It had the vision, and it created a mass (higher) education system. Because of that it's produced the best politicians, huge liberal arts programs, best medical research. I always felt that India should have that."

In 2005 Agarwal hired consulting firm A T Kearney to scour India for the best site for the university. Around that time he heard of four academics, three Indian and one Indian-American who believed that India was in serious need of boosting its higher education system and had shopped around a plan for a new university to several Indian billionaires. Getting no takers, they had shelved the plan and then got a call from Agarwal. The men have become integral in shaping the university and giving it credibility.

The key to the plan is to build a new town big enough to accommodate up to 10,000 faculty members and as many support staff. "The university has no chance of succeeding without a township," says one of the academics, Pratap Bhanu Mehta, head of the Center for Policy Research in New Delhi and a professor at New York University's law school. "A faculty member from the US goes to Delhi and he has 20 schools for his kids to choose from. In Puri (the nearby town) there's no such option. We need to create a township, and as a result land requirements have escalated and that makes the project more challenging but also more revolutionary."

Apart from housing, plans call for schools for the children of the faculty and residents, a handful of luxury hotels, shops, cafes, a big convention center, an Olympic-size stadium, a football stadium, lakes for water sports (Agarwal has visions of crew teams similar to those at Harvard and Oxford) and its own power plant.

"That's the ambition," says Agarwal. "These things can happen only when somebody gets up and says, 'Look, I'm going to put my money (on this).' I believe that if you have to do a few things in life, this is the one thing I'm going to pursue." Parts of the plan, such as the hotels and the convention center, are not a priority, and Agarwal may bring in investors later on to pay for them. He may also form joint ventures with companies or fellow billionaires to fund some of the research centers as the university grows.

Crucial to the success of this venture is attracting faculty of international acclaim. Sitting in his villa in Mumbai, overlooking the Arabian Sea, Agarwal outlines his strategy: target Indian teachers overseas because they might be interested in helping out their native country, younger academics, who typically have a tough time getting tenure quickly and are eager to be part of something new, and veteran star professors who may be persuaded to offer their expertise to a startup.

He's undaunted by the task of attracting top people to an unheard-of university with no track record. "Same thing happened 15 years back when no one had heard of Vedanta," he says. "Our sales were $1 million then and we had a profit last year of $3 billion. It will happen."

A T Kearney presented the plan to seven states to see which would provide the most help in acquiring contiguous plots of land. In the summer of 2006 it zeroed in on Orissa, specifically on Puri, situated along a scenic coastline with the Bay of Bengal on one side and two smaller rivers flowing through the prospective campus.

The four academics, who had become friends years earlier when their paths crossed at various universities, are using this opportunity to design their ideal university. Bringing together professors from the US and UK, "We're saying to them, if you had the opportunity to reinvent education in your field, what would you do?" says Anand Shah, who started a charter school in Boston and cofounded a nonprofit in India.

For the brainstorming session on an engineering school, for instance, he pulled in participants from the National Science Foundation, UCLA, Stanford, Princeton, the University of Illinois at Urbana-Champaign and other places. For the session on a business school, participants came from Oxford, Wharton, the Indian Institute of Management, Insead and Nanyang in Singapore. Most of them were of Indian origin.

Agarwal hired Ayers Saint Gross, a Baltimore, Maryland specialist in campus architecture, to design the university, and he wants to move ahead at full speed. But the Indian bureaucracy and the mass protests, sometimes violent, that appear whenever a big project is proposed--such as recent plans to build a Tata car plant in West Bengal and a Posco (nyse: PKX - news - people ) steel plant in Orissa--have slowed him down.

He wanted 10,000 acres, but he had to scale that down to 6,000 and has been able to purchase only 3,900 so far. The acquisition of so much land is a lightning rod for criticism in the region. Some 18 villages will be affected and at least 450 people must be relocated, says the foundation. Agarwal, on the other hand, cites Stanford, which is spread over 8,180 acres.

Meantime, an agreement for Vedanta to acquire contiguous plots of land lapsed last summer, and Agrawal hasn't been able to renew it because the post of the minister who handles that is vacant, casting doubt on the legality of the project. Also, the bill that would establish the university as a legal entity is stalled in the Orissa parliament, thanks to the opposition.

Sanjeev Zutshi, who heads the university project, says the legislation would give the university the right to confer degrees, and since the first batch of students won't be admitted until July 2011, there's plenty of time. Other critics, including a former state advocate general, go so far as to claim that Agarwal could instead end up mining the land, which is rich in ilmenite, rutile and zircon.

The company says this is ridiculous and asks why it would go to all the trouble of winning approval for a university if it didn't really want to build a university. It also dismisses the opposition, especially a handful of recent protest rallies led by former members of Orissa's parliament. "This is several people trying to jockey for tickets for upcoming elections," Zutshi says.

"We have acquired the land from 2,800 individual landholders. That's a sizable number and can't be achieved without support from the people." To help win that support, the foundation runs a mobile veterinary van, covers all the expenses for 275 village children it sends to a private school and is training workers for the construction jobs that will need to be filled.

The concerns are not limited to the political players. The four academics have qualms because of the tarnished image of Agarwal's mining business, the source of the philanthropy. Vedanta Resources wants to mine the Niyamgiri Hills in Lanjigarh, which are rich in bauxite but feature abundant flora and fauna and are being considered for a wildlife sanctuary. A tribal community native to the region prays to the hills and as a result doesn't farm on the top.

The company has been seeking permission since 2002 to mine the top of the hills and build a smelter and a refinery at the bottom. The government has approved the refinery and the smelter but hasn't given the go-ahead to start mining. Environmentalists accuse the company of violating the law, hiding the extent of the environmental degradation that would occur, forcibly evicting the residents and depriving the tribal community of its place of worship and its home. Tribal members formed a 10-mile human chain in January in protest. The company's finance director, Tarun Jain, says only that "the Supreme Court has cleared the project with certain conditions after considering all objections."

Mehta and his academic colleagues are well aware of the controversies surrounding their benefactor. "It's crucial for the success of the university that there's a clear separation from the company," he says. "It's a project in its own right and not a commercial project, and it shouldn't be used to compensate for other activities of Vedanta. That's what makes this genuinely philanthropic: if he just hands over this grant and is not expecting any return on this."

Shah agrees. "You've got someone who's genuinely putting down his own resources," he says. "To not support that because I have ideological issues that are unrelated, to me seems to be hypocritical. The history of universities is such. Duke (in the US) was built with tobacco money; this university is as genuine a philanthropic project."

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