The Indian higher education system is presently facing several challenges. The challenge of global competitiveness has been added to other demanding tasks such as access, equity, relevance, quality, privatisation and internationalisation in the face of a resource crunch. This article gives an overview of trends in the expansion of higher education and examines variations in participation across states, gender and social groups. An attempt has also been made to discuss the trends in the financing of higher education and the required resources to meet the target of allocating 6 per cent of the GDP to education. It argues that without appropriate policy interventions in school education, it would be of little use to have interventions at the higher educational level, which discriminate in favour of girls, SCs and STs.