All universities would ideally want that no one should be denied education just because someone can not pay the costs of attending the university. And hence all of them would have some financial support available for those who are coming from economically disadvantaged sections of the society. Usually, there is going to be a limited amount of support available and the number of claimants is much higher.
So a university needs to identify the most needy students from among all the applicants. The process is usually very simple. We ask students for the total income of their parents, and choose the ones who report the minimum income. Of course, we don't trust them. We ask them to share a copy of the income tax return, if their income is in the taxable range. If the income is less then that, we want them to give an affidavit on a stamp paper. I am told that penalty of lying in an affidavit is more than the penalty of lying on a plain piece of paper. Though I wonder if anyone ever has been prosecuted for misreporting his/her income.
The problem in this system is that in India, in a large number of cases, there is no relationship between the reported income and actual income. As our Finance Minister said in his budget speech this year, "India is largely a non tax-compliant society." One immediately notices that a peon working for the government gives a certificate that he is earning 3-4 lakh rupees in a year, but the businessman father of a student carrying a 25,000 rupees phone will claim that he earned only 2 lakh rupees a year. To give financial support to the latter would not really be fair.
At IIIT-Delhi, we have tweaked the system a bit. We realize that the economic background of a family can be judged from three things - income, expenditure and ownership of assets. Out of these three things, it is easiest to hide income, and most difficult to hide expenditure. And therefore, we ask an important question about expenditure in addition to the income certificate. We ask for the amount of money that the student gave to the school in class 12th in the name of tuition and various other fees. Notice that it is difficult to hide as most of the time, the information is available on the website. Also, it is very unlikely that a rich person (who may be hiding income and claiming to be poor) would send his/her son/daughter to a government school or a low-cost school. With this simple addition to the process, we are able to reduce the number of applications very drastically, and able to provide some financial support to pretty much everyone whose income and expenditure is within the limits set by us.
Of course, it is indeed possible that someone has studied in somewhat expensive schools and yet paying our substantial tuition is difficult to afford for them. For such cases, we have a separate process where a small committee will talk to individual students, seek all sort of information, much more detailed than what I mention above, sometimes asking for bank statements, or electricity bill, etc.
In our process of selecting students to provide financial support, we have kept the income limits higher than most government universities. We can do this because we also depend on expenditure (in particular, school expenses) as a significant parameter to judge financial need. We believe that we are able to target support much better than other places which only look at self declared income.
I wonder why government does not define economically backward based on income, expenditure and ownership of assets. My guess is that mostly the schemes for economically backward have political aims and hence there is really no interest in figuring out whether someone is really economically backward or not. Let there be more beneficiaries.