New Delhi/Ahmedabad: Len V. George graduated from the Indian Institute of Management (IIM) in Ahmedabad in 2002, but its lessons remain fresh in his mind. Lately, he’s been thinking about one in particular—the business model where government serves as policy maker, operator, regulator all in one.
“I remember reading while at IIM that such models were fast becoming obsolescent in sectors, particularly electricity and telecom,” said George, a manager at a professional services firm. “Now it is surprising to hear of such a model being discussed for the IIMs themselves.”
By this, George refers to a publicized tussle between the government and IIM officials for control. The saga began in 2004 when then human resource development minister, Murli Manohar Joshi, ordered IIMs to slash their Rs3 lakh fee for the two-year course by 80%, a move which was successfully challenged in court by students. In April this year, the government, led by HRD minister Arjun Singh, asked IIMs to delay admissions notices as it fought a Supreme Court order on reservations; eventually admissions were released 16 days, several press conferences and cabinet meetings later. And then this week, there is speculation that a Bill that will govern IIMs more closely might come before Parliament.
The main debate between IIMs and the Centre boils down to one of finances and governance. The government wants to have more say over fees and continue to ratify hires. IIMs maintain that they can manage their money and their people. They say that’s why they’re in the business of teaching students, after all.
Across the campuses of India’s elite business schools, from canteens to classrooms, alarm bells have been ringing. And alumni, scattered in boardrooms and corner offices around the world, are becoming equally vocal.
Last month, they first threw their hats into the ring when they hired prominent lawyer, Harish Salve, to join students’ groups protesting the extension of reservations to other backward classes. Under the name Pan-IIM Alumni Association, the organization has emerged as a litigating force. It says it will lobby against any proposal to increase government control by meeting members of Parliament.
“It is a tragedy that IIMs have to be kept ‘scared,’” Narayana Murthy, co-founder of software powerhouse Infosys Technologies Ltd said in a recent email to Mint. Murthy did not attend IIM, but his first job was as chief systems programmer at IIM-A. Between 2001 and this past March, he served as chairman of the board of governors of IIM-A during its most turbulent relationship with the government. Murthy, who had been appointed by the previous BJP-backed government, has been replaced by Vijaypat Singhania, chairman emeritus of apparel manufacturer and retailer Raymond Ltd.
In an interview this week, D. Purandeswari, the minister of state for human resource development who oversees higher education, insisted the government is committed to maintaining the autonomy of IIMs, and will only object to decisions like raising fees if they limit equity and access.
She said she was not aware of a Bill seeking to strengthen government control on IIMs. “IIMs are free to set their own curriculum and, within our guidelines, appoint faculty”, said Purandeswari. A spokesperson for the ministry also maintained on Thursday that there is no Bill.
Bill or no Bill, a desire to influence fee structures would be a shift in the government’s past stance. The Kurien Committee, set up in 1992 by the government in the midst of a financial crisis, recommended that IIMs find ways to reduce their dependence on government grants. The committee also concluded that management education cannot be heavily subsidised. The government accepted and implemented all the committee’s suggestions.
IIMs in Ahmedabad, Bangalore and Kolkata no longer receive funding from the government, relying instead on tuition fees from regular enrolment, executive training courses, consulting gigs and placement fees. The remaining three—in Indore, Kozhikode and Lucknow—still receive government funding.
The current fees of IIMs range between Rs4.5 and Rs5 lakh for the two-year course. “IIM Bangalore has hiked fees by 66% in the last two years,” notes Premchand Palety, director of the think tank, Center for Forecasting and Research, who also writes The Business Case fortnightly column for Mint.
“Both the government and IIMs have not come clean about their end objective in this autonomy debate” says the alumnus who requested anonymity because his company recruits on IIM campuses and is dependent on the institutes for getting coveted placement spots.
One area where the institutes say they wish the government would either help or get out of the way is in helping them spread the IIM brand, which has grown with India’s economy to connote a demanding curriculum and highly paid graduates.
Columbia Business School, which tied up for a student and faculty exchange programme with IIM-A earlier this year, said it considers the institute at par. “It is a very rigorous school”, said Jane Trombley, spokeswoman for Columbia Business School.
But IIMs say they do not have the power to embark on similar partnerships.
For example, IIM-B has been in the process of obtaining government permission to open a campus in Singapore for more than a year. “We understand that this in the final stage now,” said Atul Temurnikar, who, as head of the Global Indian Foundation in Singapore, has offered space to IIM-B in the foundation’s 16-acre campus. But, in order to do that, IIM-B had to change its constitution and get permission from the Centre. “IIM-A has to break in into the top 10 business schools,” said alumnus George. “Their ability to achieve these goals is hampered if they go to the government for every second thing.”