Higher education has a crucial role in India's ability to succeed in the modern global economic system. The number of institutions serving the sector and student enrolments in India have expanded very rapidly in recent decades.2 Enhanced educational attainments have contributed significantly to the high economic growth rates in the services sector that have buoyed India's recent economic performance. Yet higher education institutions and their performance are plagued by many problems, and this has been a major source of policy concern.3 This paper will focus on two of these major issues-namely the phenomenon of "faculty shortage" and the "quality" of higher education. The Indian higher education sector is heterogeneous. Different types of higher education delivery institutions co-exist, and these operate with very different motives and working contexts. All types of higher education institutions face serious problems of faculty shortage and in maintaining the quality of education. However, they follow different strategies while responding to this problem. Moreover, the actions of one type of institution can have important impacts on others. These impacts can be either positive or negative. Hence in order to develop strategies for addressing the problem of faculty shortage, it is important for policy makers to take an overall systemic view of how the higher education sector.