Management education needs a new regulator

Management education needs a new regulator
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First Published: Mon, Jan 07 2008. 12 15 AM IST
Updated: Mon, Jan 07 2008. 12 15 AM IST
In the past few months, the growing resentment against India’s regulator of business and engineering schools, the All India Council for Technical Education, or AICTE, has finally found expression in the media, especially in this newspaper, which has systematically looked at the functioning of the council as well as the behaviour of its top officials.
While it is always possible that this spotlight will be enough to make sure that a more credible leader, untainted by nepotism and corruption charges, is installed at AICTE, that’s not the solution. There needs to be a restructuring of the whole system.
AICTE has encouraged mediocrity in our higher education. The standards set (see accompanying article) are for minimum requirements, such as minimum number of permanent faculty, the minimum campus size, the minimum built-up area. You get the drift. Many AICTE-approved educational institutes have adhered to the minimum requirements and not cared to go beyond. As a result, AICTE approval has become a licence for them to be complacent and, of course, to make money.
Education is one of the fastest growing businesses in India these days. An average engineering college has annual revenues of anywhere between Rs20 crore and Rs25 crore. An average business school has annual revenues of Rs5-10 crore.
Since, in the present quota raj of the AICTE, supply is restricted, getting students for an AICTE-approved institute is not a big problem. By adhering to or managing AICTE rules, an institute can generate an easy surplus of up to 50% of the revenues. Since a not-for-profit society or trust is supposed to manage such institutes, they simply devise ways to siphon off funds, such as owning a for-profit body that bills the not-for-profit body for various activities, such as maintenance or even for sourcing teachers. Then, there are “donations” collected from students.
Some engineering colleges are collecting Rs10-15 lakh per seat and some B-schools are charging Rs 5-10 lakh per seat. Revenue from these back-door admissions are, in most cases, not accounted for. Everything can be kept under wraps because the school or trust’s governing body is packed with close relatives of the main promoter or, in some cases, relatives of AICTE employees.
It is for this reason, I believe, that the present AICTE law of not allowing for-profit bodies to run educational institutes is flawed. Allowing companies to operate—and compete—in this field will at least prevent accumulation of “black” money and should lead to better governance. At least, students will get better choices.
The huge profits assured for educational institutes, in the present system, is the reason why some serving or former AICTE officials, and many politicians have opened educational institutes. About a dozen such AICTE officials own engineering colleges and B-schools. While in service, they put their close relatives in the governing body of the trust or society. Once they retire, they take over. According to people familiar with the regulator and its activities, the net worth of many such officials is estimated at about Rs100 crore.
Clearly, there are urgent reforms needed in regulating higher education. As a first step, we need a separate regulator for engineering and business schools.
For management education, which, in my view, is not a technical course, a different approach is needed. The regulator in this case has to be more like a facilitator. It could facilitate faculty development, industry-institute interaction, standardization of programmes and curriculum development. It can also accredit B-schools, which would be a voluntary exercise. Its regulatory role will be primarily to redress complaints of students and their parents if they feel that they have been cheated. The present AICTE rule where it is mandatory for every institute to have a disclosure page on their website is a good one. The page, however, should clearly give details about each faculty member, the infrastructure, the placements and the full fees being charged. If students or parents feel that what is given on the disclosure page is not in line with reality, they should be able to quickly and easily register their complaint with the regulator.
The new regulatory body can also be empowered to take action against those institutes that take to false advertisements. I am constantly amazed at the lies being told in ads from some B-schools, ads that newspapers and magazines accept without any hesitation in their buyer-beware mode of thinking. The new business education regulator should, however, not be allowed to put restrictions on the growth of B-schools. They should have the freedom of developing their curriculum, the facilities they provide and fees they charge, provided everything is transparent.
It’s time that government stops its focus on policing higher education and concentrate its efforts on primary and secondary education. Our higher education market is mature enough to deserve freedom.
Premchand Palety is director of the Centre for Forecasting and Research (C-fore) in New Delhi, from where he keeps a close eye on India’s business schools. Comments are welcome at
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First Published: Mon, Jan 07 2008. 12 15 AM IST