The decision was taken keeping in mind the objections of the Parliamentary Panel to various provisions of the bill, Law Minister Ravi Shankar Prasad said.
The Higher Education and Research Bill, 2011 had sought to establish a National Commission for Higher Education and Research.
Its mandate was to determine, coordinate, maintain and promote standards of higher education and research other than agricultural education and minimum standards of medical education.
The bill was introduced in Rajya Sabha in 2011 by then HRD Minister Kapil Sibal but failed to evolve a consensus as several parties raised objections to the provisions of the legislation.
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"The Union Cabinet chaired by Prime Minister Narendra Modi today gave its approval for withdrawal of the Higher Education and Research Bill, 2011 from Parliament (Rajya Sabha)," a government statement said.
The Parliamentary Standing Committee on HRD had expressed its concerns on certain provisions of the bill more so on a provision to subsume University Grants Commission (UGC), All India Council for Technical Education (AICTE) and National Council for Teacher Education (NCTE).
With the withdrawal of the bill, the government made its intention clear about strengthening UGC.
The committee would evaluate the performance of the UGC in coordinating and determining the standards of education in universities, conducting an audit of its regulatory reach and requirement of regulatory space for the UGC with respect to other regulatory bodies in the higher education sector.
It would also introduce a performance based system of release of funds and align it to the "Rashtriya Uchchatar Shiksha Abhiyan (RUSA) guidelines.