As provided in the Transfer Deed of 1939, the State Government has agreed to provide entire funding for running the Institute. As a Deemed University, the University Grants Commission provides development grants under Five Year Plans for the research and teaching activities of the Institute. In the past the Institute received substantial grants from the Rockefeller Foundation for developing Linguistics and from the Ford Foundation for developing Archaeology.
In view of the excellent work done by the Institute in research and teaching activities, Shri. P. Chidambaram, the Hon'ble Finance Minister, while presenting the annual Budget of the Govt. of India in the Parliament, has sanctioned a special grant of Rs.5.00 crores for the developmental activities of the Institute. Also at the initiation of the Principal Secretary to the Government of Maharashtra a special grant of Rs.3.56 crores has been sanctioned to the Deccan College for construction of a separate building for Archaeology Museum. In addition to the staff provided by the Government of Maharashtra, the Ministry of HRD, Government of India gives regular grant to the Sanskrit Dictionary Project.