Joshi should leave our global brands alone
V. Eshwar Anand

UNION Human Resource Development Minister Murli Manohar Joshi has stirred a hornet’s nest by peremptorily reducing the annual tuition fee of the IIMs. The widespread resentment against the decision is not confined to the faculty and students of the six IIMs alone. Almost everyone connected with management and professional excellence has condemned the decision.

It would be difficult for one to endorse a fee cut in these centres of excellence. There was absolutely no reason for the HRD Ministry to go ahead with such an ill-conceived move. Fears over the adverse consequences of the decision on the quality standards of these institutes seem reasonable.

What adds credence to the chorus of opposition is U.R. Rao’s statement that he had not recommended the fee cut in the IIMs/IITs in his report on technical education (as claimed by the HRD Ministry) and that he had examined only those institutions coming under the purview of the All India Council for Technical Education (AICTE). Who is speaking the truth? The Ministry? Or Rao? Moreover, reports suggest that the HRD Ministry had "twisted" the ruling of the 11-Judge Bench of the Supreme Court in the T.M.A. Pai case on capitation fee to justify the fee cut in the IIMs. The Ministry had reportedly used the solitary observation in this ruling that "an educational institution cannot charge exorbitant fee from students" to suit its ends. Undoubtedly, the two episodes —Rao’s statement and the twisting of the Supreme Court ruling — expose Joshi’s hidden agenda to short-circuit the academic excellence of the IIMs, erode their autonomy and make them subservient to his dictates.

Joshi’s thesis that the IIMs charge exorbitant fee is far from truth. A careful study of the fee structure suggests that his Ministry has not made a fair and objective assessment of the issue before the 80 per cent fee cut. Though IIM-Ahmedabad, for instance, charges an annual tuition fee of Rs 1.5 lakh for the post-graduate programme, it spends Rs 3 lakh per student. The fee includes various other expenses incurred on each student such as reading material for 40-odd courses; maintenance of the library with over 1.5 lakh titles added every year; subscription of over 40,000 periodicals and 650 journals; and single occupancy rooms with telephone and Internet connection. The expenses also include the cost of faculty time and research staff support. Since a student takes up 23 courses in the first year and about 18 in the second year, library work becomes time-consuming. The tuition fee, thus includes putting together the study material for all the courses and the huge Internet time they incur.

Joshi calls the IIMs as "elitist". This is ludicrous. Figures show that though the annual income of most parents of the IIM students is less than Rs 1.5 lakh, they have never faced a fund problem. A fresh IIM graduate begins the career with an average starting salary of Rs 7-10 lakh a year. Banks, without insisting on collateral, offer easy loans on a platter. While most borrow from banks, some use their savings accumulated over 2-3 years of working while only a small number depend on parents. Since loan repayment starts only after the student has started his earning, poor and meritorious students have not faced fund problem.

Joshi’s claim that the fee reduction cannot be interpreted as governmental interference in the functioning of the IIMs rings hollow in the light of his consistent attempts to saffronise education at various levels. Teachers and students fear that the fee cut is the first step to governmental interference. Joshi intends to introduce many more changes — restructuring the admission process; increasing the student intake as also the student-teacher ratio; a governmental body to conduct the entrance examination; scrapping the interviews and group discussions and so on. It is feared that all this will open up the IIMs to political and bureaucratic manipulation, hit the quality of the intake and deny the institutes their legitimate right to choose the best talent.

Joshi wants the IIMs to raise alternative resources. But this is easier said than done. In fact, the IIMs are in a quandary as to how to make good the loss in revenue after the fee cut. This would particularly hit the newer ones at Indore, Kozhikode and Lucknow that are yet to develop the capacity to raise resources. Let alone raising resources, will it be possible for them to even increase the number of executive development/educational programmes? More to the point, can they sustain the present tempo of education and invite the best guest faculty? Meanwhile, in the Interim Budget for 2004-05, the allocation (Budget estimate) for all the sixIIMs has been slashed from Rs 74 crore to Rs 45 crore. This is bound to affect the IIMs where norms and practices are standardised to suit global requirements.

Subsidisation of higher education, including management education, per se is not bad. But it would be eminently sensible if the government, instead of interfering with the functioning of the IIMs, concentrates on improving the primary school and vocational education. Most primary schools in the countryside are in a mess — no buildings, no teachers and no blackboards. The HRD Ministry’s efforts in this direction have so far been scrappy and fragmentary with no significant results. As for the IIMs, let the private sector chip in with adequate funds. After all, the IIMs produce managers more for the private than the public sector.

It is mainly because of their consistent endeavour to improve their quality and infrastructure to face the global challenge that Bill Gates and Scott Adams have recognised the IIMs as global brands. It would be in the fitness of things if the autonomy of the IIMs is maintained. Joshi and his Ministry would do well to leave our global brands alone.

A day before the Lok Sabha was dissolved the HRD ministry directed the IIMs to reduce the fee to Rs 30,000 per student from the academic year 2004-05. The corporate world, academicians and students have termed this as an attempt to take away the financial independence of the institutes. They maintain that this, in turn, would impair the operational autonomy of the IIMs.

"Autonomy without financial independence is meaningless. The fee reduction has not been done for the sake of making the IIMs more accessible to students from all sections of society but for making the institutes dependent on the government so that the government can exercise more control on their functioning," an academician from a premier Delhi-based institute said on the condition of anonymity.

At present, the IIMs charge Rs 1.5 lakh per annum per student. This includes everything except expenses on food. Under the revised fee structure, however, an IIM, which takes in about 240 students every year and charges Rs 15,000 per year from every student, would get Rs 36 lakh. Compare this with an average annual expenditure of Rs 2 crore that the institute incurs on faculty alone.

"The question is who is going to bridge the cost-revenue mismatch. The reputation of business schools are critically dependent on the quality of faculty. Till now, the IIMs and the IITs have been able to attract top class faculty. The new fee structure might put a question mark on the capacity of the IIMs to pay dollar-equivalent`A0salaries to its faculty," the Delhi-based academician said.

Originally, the fees charged by the IIMs were negligible as a result of which they had to depend entirely on Central grant. With the financial burden on the government increasing every year, a committee headed by Verghese Kurien was formed for looking into the ways and means of the making these institutes financially more self-sufficient.

The Kurien Committee, which filed its report in July 1992, argued that "financial autonomy is essential for the IIMs, if they are to retain and enhance their capacity for excellence."

Although the Kurien Committee did not go into the general question of subsidisation of`A0higher education, it did observe that there was a "good scope" for taking up a variety of measures for raising internal revenues. Such measures may include upward revision of the fees, charging recruitment fee from client organisations for campus interviews and strong linkages with the industry, among others. It also recommended the creation of a corpus fund for each institute the proceeds from which would be utilised to bridge the gap between the annual maintenance expenditure and the internal revenues of the institutes.

FICCI officials say that one, the governmet is not justified in subsidising higher education and two, the state should provide loans to students from economically weak sections (see box).

Similar suggestions were put forward by the Kurien Committee, albeit in more general terms, "In order to mitigate the impact of revising the fee structure on talented students coming from economically weaker sectors, the government should have a scheme of providing education loans to the needy students through banks."

The CII, which comprises organisations that are regular recruiters from IIM campuses, also holds a similar line of opinion. "The focus should be on primary education. The bulk of government funding should be spent on primary education. They should be thinking of innovative funding mechanisms for students rather than cutting fees," a CII spokesperson said.

The story so far

July 1992: HRD Ministry set up the Kurien Committee to look into ways of making IIMs less dependent on government grants. The committee recommended an increase in fees and reduction in subsidies. The recommendations were accepted and implemented over the subsequent years.

2003: The Ministry of HRD appointed the U R Rao Committee to look into the question of structure of technical education.

August 2003: IIM were asked to sign an MoU, with the government. The signing of the MoU was made a condition for grants. IIM -A, B and C did not sign.

November 2003: CAT was cancelled following the leakage of question papers.

February 5, 2004: The government directed IIMs to reduce the fee from Rs 1.5 lakh to Rs 30,000 per annum.

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