Prime Minister Narendra Modi ’s centenary address at the University of Patna in Bihar included the announcement of a competition to identify 20 Indian universities that have potential to become “world class”. Offering them financial support and “unshackling” them from regulations and restrictions, they will be free to develop their own roadmaps and pursue their ideas of excellence. A panel of experts will oversee the selection process.This announcement has been met by scepticism by some experts. Doesn’t Indian higher education have other more important challenges? Across the system 40% of faculty positions remain unfilled. Funding for education is only a small percentage of India’s GDP compared with nations whose institutions inhabit the top 500 worldwide rankings. Also, top universities need autonomy to thrive and India has a history of restrictive overregulation.There is some truth to these observations, but as one might expect in a country the size of a subcontinent the real story is a bit more different and complex.First, while Rs 1,000 crore per institution is not large by certain international standards, it is a significant amount of money in India. The National Mission on Higher Education (the RUSA programme) of the HRD ministry, which is working to improve the management of hundreds of state colleges and universities, is witnessing positive changes at institutions because it has given funds at the speed they can be absorbed. Sudden large infusions of money simply can’t be productively taken up. What has worked at these institutions is smaller sums tied to detailed plans for strategic change. RUSA has also shown that tying money to measurable change leads to greater confidence by the government and, in turn, more investment by it. It creates a virtuous cycle of wise investment.Second, given the fundamental infrastructure needs facing India, the government cannot allocate the billions of dollars that underpin places like Harvard. However, through this process it can identify visionary institutions where private support would be well used. In doing so, it can inspire the growing number of high net worth Indian families both here and abroad to invest in the best institutions in the country and make them stronger. The large endowments of elite US colleges and universities were all built by private wealth.Third, this initiative’s goal is to create Institutions of Eminence – excellent universities that serve the needs of India – not “world class universities” narrowly defined by international rankings. Institutions of Eminence are meant to model what it means to teach and do research in ways that build a better, healthier, and more prosperous world. While international rankings reward certain kinds of institutions (especially large, research universities), the Institutions of Eminence scheme aims to foster excellence of many varieties.Fourth, education at its heart is about human and talent development. Having truly exemplary universities allows India to develop academically excellent, culturally relevant knowledge that can be used in the education of its people and give it freedom from relying solely on materials imported from elsewhere.Fifth, critics miss that the primary goal of the initiative is to raise aspirations. RUSA has shown that states and universities across the country can make notable improvements. Some universities have made great leaps forward. It is expected that the next proposed phase of RUSA will potentially include the establishment of a top tier of public institutions that would get even more specialised training and additional support to continue the road to excellence.The Institutions of Eminence initiative represents the highest tier of aspiration in India. While it is true that many institutions of higher learning in India have too few resources and some struggle with quality, it is also the case that many graduates of Indian institutions leave to attend the most prestigious universities in the world. India can aspire to excellence because it is already achieving it.Taken together initiatives such as RUSA and the newly announced Institutions of Eminence scheme have the potential to begin to shift the culture of institutions from day to day management to strategic leadership, from incremental improvement to far seeing change, from discouragement to hope. These are steps in a long journey that, with continued oversight and prudent distribution of resources tied to measurable results, will support a growing cadre of universities across India from which world class universities will inevitably spring.B Venkatesh Kumar is Professor, Tata Institute of Social Sciences. Alan Ruby is Senior Fellow and Matthew Hartley Associate Dean, University of Pennsylvania