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Neighbourhood B-Schools | High on promise, but can they deliver?

Road to fulfilment? Motorists on the highway drive past ads for a training institute. Despite the increasing number of B-schools in India, demand still exceeds supply. Ramesh Pathania / Mint (Road to fulfilment? Motorists on the highway drive past ads for a training institute. Despite the increasing number of B-schools in India, demand still exceeds supply. Ramesh Pathania / Mint) — Road to fulfilment? Motorists on the highway drive past ads for a training institute. Despite the increasing number of B-schools in India, demand still exceeds supply. Ramesh Pathania / Mint
**(Road to fulfilment? Motorists on the highway drive past ads for a training institute. Despite the increasing number of B-schools in India, demand still exceeds supply. Ramesh Pathania / Mint)**

12 min read . Updated: 05 Mar 2009, 12:35 PM IST Pallavi Singh

New Delhi: In sleepy Chakradharpur, a part of Jharkhand known for its mines, a vocational course in computers is the best a young man seeking a fortune can do. So it wasn’t surprising that Ashish Gupta, now 25, a poorly paid instructor at a local computer school, decided to look elsewhere as he sought to chase his three-letter dream: an MBA, or master of business administration, the passport to a high-paying job in a bank or consumer products company and all associated trappings.

Road to fulfilment? Motorists on the highway drive past ads for a training institute. Despite the increasing number of B-schools in India, demand still exceeds supply. Ramesh Pathania / Mint

For young men such as Gupta, such private business schools present a more accessible and, therefore, attractive option than the Indian Institutes of Management (IIMs).

Gupta’s quest took him from Chakradharpur to the outskirts of Delhi—to the Institute of Productivity and Management (IPM) in Ghaziabad in Uttar Pradesh. He went through brochures and publicity materials—including ads released by the schools touting the salaries their graduating batch received the previous year. He liked the fact that IPM was recognized by AICTE. He liked its proximity to New Delhi, which meant access to companies. And he liked the Rs2.76 lakh a year salary, IPM—most B-schools in India are big on abbreviations—claimed as the average its graduating batch received. In Chakradharpur, 276,000 is a big number.

Aspiration road

IPM’s building, on the busy road that connects Delhi to Meerut, in Uttar Pradesh, is a relatively nondescript one in a neighbourhood where elaborate construction would appear to be a hallmark of educational institutions. Here, as in parts of Delhi and its suburbs, and indeed several parts of India, the correlation between an ostentatious edifice and the quality of education imparted within would appear to be high. And these structures reflect not just the aspirations of people such as Gupta with MBA and dollar dreams in their eyes, but also the glaring gap between demand and supply.

It is to schools such as these on the Delhi-Meerut road that students from Bihar, Jharkhand, and Jammu and Kashmir come.

Yet, when they leave, few realize their dreams.

Gupta, for instance, graduates in April with a job with an information technology firm in Delhi-satellite Gurgaon. The salary, Rs16,000 a month, is short of his expectations, but he at least has a job. With India’s economy slowing after three successive years of 9%-plus growth, even some students at India’s premier IIMs are finding it difficult to land jobs.

Raising expectations

Most schools propagate the myth that management education, any management education, equals high-paying jobs. They do this through advertisements in newspapers and magazines, and even on TV.

Yet, some of them fail to deliver.

Their programmes remain unapproved, they charge high fees, and they usually do not find jobs for everyone in the batch—and if they do, these jobs are not as high-paying as the students expect them to be.

The regulator of management and technical education, AICTE, can only prescribe the number of seats for the PGDM (postgraduate diploma in management) programme; it has no say in terms of how much fees business schools can charge.

“Irregularities are common" in the PGDM programme because the schools offering these don’t necessarily have to be part of the “university system", said R.A. Yadav, chairman, AICTE. He added that these include “some institutes...charging exorbitant fees just to make money."

The contrast is stark, and clearest, in the case of the rare school that offers both diploma and degree programmes in management. Any school that desires to offer a degree in management has to be affiliated to a state or central university that prescribes the fee structure, curriculum and the number of students that can be admitted.

The Institute of Professional Excellence and Management (IPEM) in Ghaziabad, a Delhi-satellite is one such school that offers both degree and diploma programmes in management. It charges Rs5 lakh for the diploma course, and Rs2.5 lakh for the degree course. The MBA programme is affiliated to the Uttar Pradesh Technical University.

“Today, a PGDM course is more in demand since it can be modified as per market needs by the B-schools and provides better quality of management education. This explains the difference in fee structures too," Shally Dhir, admission counsellor at IPEM, explained.

Amit Tuli, manager (corporate communications), at IPM, who doubles up as a teacher, admitted that there is sometimes a disconnect between what students expect to get paid when they complete their course and what they actually end up getting paid, and blames this on the tall claims made by some B-schools. He added that IPM doesn’t consider management education a “cash cow" and said this is evident in the fact that the school didn’t increase tuition fee this year because it chose not to do so in the shadow of the economic slowdown.

“If you visit the business schools in the neighbourhood, all of them have hiked their fees this year."

IPM charges a tuition fee of Rs4 lakh, plus around Rs1 lakh for hostel accommodation, up from a tuition fee of Rs2.7 lakh in 2007.

According to students at IPM who didn’t want to be identified, the highest offer on campus this year has been Rs28,000 per month, by ICICI Prudential Life Insurance Co. Ltd, a joint venture between ICICI Bank Ltd—one of India’s foremost financial services companies—and Prudential Plc.—a leading international financial services group headquartered in the UK for life insurance policies.

Tuli said the offer was actually Rs33,000. Still, this number is lower than the Rs41,000 a month salary listed as the highest offered last year in IPM’s ads and its mandatory disclosure brochure, a document with details on courses, fees, placements and faculty, which all AICTE-approved institutes are required to put up on their websites and notice boards.

Balancing books

Rule book: A large number of private B-schools have cropped up all along the Delhi-Meerut highway. India’s regulator for such educational institutes, the All India Council for Technical Education, plans to make its approval process for private schools even more stringent, with a uniform calendar for postgraduate diploma programmes, standard nomenclature for all management courses and even unique enrolment numbers for students to check the practice of enrolling more students than they have permission to admit. Ramesh Pathania / Mint

AICTE’s Yadav said the regulator is still struggling to address the issue of inconsistent fee structures.

Meanwhile, the upward trend continues. Last year, schools such as the Institute of Management and Technology, Ghaziabad, Management Development Institute, Gurgaon and International Management Institute in New Delhi increased their fees.

All three are among the better-known schools and rated by recruiters in the second-tier—just after the IIMs.

This year, even lesser-known schools have increased fees.

BLS Institute of Management in Ghaziabad’s Mohan Nagar, for instance, raised tuition fee from Rs5.56 lakh to Rs7.56 lakh for the 2009-11 batch .

And Cosmic Business School, which runs two campuses on New Delhi’s Mathura Road and at Vasundhara in Ghaziabad, listed as an unapproved B-school in AICTE’s list of such schools, has increased tuition fee from Rs3.3 lakh to Rs4.5 lakh for a postgraduate programme in management (PGPM).

“We are providing ample opportunities to the students for placement. More than thirty companies have already visited our institute so far for the purpose. We hope to have 100% placement in a month’s time," BLS dean Ramendra Kumar Mithal said over email.

Cosmic Business School, when contacted, said its 11-month programme includes an expensive module on SAP certification, a course that trains people in managing and implementing business software.

Students pay the fees in anticipation of a well-paying job at the end of the programme and easy access to bank loans—at least in the past few years.

Jesaiah Selvam, professor and director of the MBA programme at Bangalore’s Indian Academy School of Management Studies (IASMS), a private B-school approved by AICTE, said government policies favouring discounts on educational loans and the priority assigned by banks to such loans have ensured that steep fees are no longer a barrier.

Prathiba Desai, a first year MBA student at IASMS, the daughter of a clerk at the Karnataka state electricity board, has borrowed Rs1 lakh from Development Credit Bank. The remaining fees of Rs2.2 lakh will be paid by “…my father", said Desai, who hopes to find a job in a “reputed" company.

There’s no certainty of that, as the experience of Praveen Kumar, a student at IPM, shows.

Kumar, son of a Ranchi textile merchant, has thus far appeared for half-a-dozen job interviews on campus but refused all offers made since the salary offered was “meagre". “Any job that pays me less than Rs10,000 is not sufficient," he said. Kumar has to pay off a loan of Rs2.4 lakh, and given the poor salaries on offer, this may have to be either paid by his father or through smaller instalments.

Reining in schools

In an effort to prevent schools from misleading prospective students, AICTE began scouring websites of schools and their newspaper ads. In 2006, the regulator released a list of 169 private schools running unrecognized courses and even formed a committee to look into their violations, which ranged from admitting more students than the approved strength to running unrecognized courses, and in many cases, even passing off distance-education courses as “full-time" ones.

In some cases at least, the schools named in AICTE’s list continue to function, even thrive.

One such is the Institute of Management and Development (IMD), which continues to function from its two campuses in Okhla’s C and W blocks, under different names—the Institute of Management and Development and the Metropolitan School of Management and Development. The institute has around 800 students, enrolled in various management programmes, fees for which range from Rs2 lakh to Rs7 lakh.

In its advertising brochure and admission prospectus, the institute claims some of its students received overseas job offers for up to Rs11.5 lakh a year last year.

The institute also claims to be a member of various trade bodies including the Federation of Indian Chambers of Commerce and Industry (Ficci) and the Associated Chambers of Commerce and Industry of India, or Assocham. Ficci media coordinator Taresh Arora, however, said the institute was not a member of Ficci.

AICTE’s Yadav refused comment on specific cases.

Students at the school, who spoke on condition of anonymity, said the number of seats in IMD’s programmes was not fixed and that the job statistics being advertised by the school were “exaggerated".

One student who will graduate this year said the school isn’t doing enough to help find jobs.

Repeated attempts by Mint—through a visit to the campus, emails, telephone calls and faxes over a period of two weeks—to elicit a response from the school failed.

Any school that wants to be certified by AICTE needs to show proof of ownership of land on which the school is built, plans for the library and details of promoters and faculty members. Yet, Yadav said, “to some extent" even some of the approved schools cut corners.

Students at BLS allege the school is asking them to find jobs on their own. They also complain about the poor quality of teaching. “With the exception of a couple of teachers, rest of (the) faculty here is terrible. They all hold PhDs on paper but cannot answer our queries in class," said a first-year student who, like the others, didn’t want to be named.

Students also allege the institute admitted 240 students last year in its PGDM full-time programme as against the 120 seats advertised. “I totally believed placement figures on its website and admission brochures. But once admitted, I realized I was stuck," the first-year student added. This student said the school is asking students to find their own internships at the end of the first year of the two-year programme. On its website, BLS lists the average salary for 2007 at Rs4 lakh, with the maximum being Rs15 lakh.

BLS’ dean Mithal denied all allegations made by students in an email reply to the questionnaire sent by Mint and added that AICTE had approved the increase in seats.

According to AICTE, the institute was sanctioned to offer only 120 seats in its PGDM full-time programme, while for its PGDM marketing and PGDM human Resource programmes, the school was allowed 60 seats each last year.

Basic inaccuracies

In some cases, the misrepresentation by schools is at a more basic level. Some advertise their so-called distance courses as “full-time" ones.

Most recruiters prefer students who have been through full-time programmes.

New Delhi’s Asia Pacific Institute of Management, for instance, advertises a dual MBA and PGPM as a “full-time programme" on its website even though the MBA degree is affiliated to two universities outside Delhi—Pondicherry University in Puducherry and Punjab Technical University in Jalandhar, Punjab.

According to the distance education council (DEC), a regulatory body of the ministry of human resource development which oversees distance education, an affiliation to a university beyond the city limits where the school is located would make its programmes distance education ones.

“No institution can offer a degree programme. Only a university is authorized to do so. It, however, can affiliate courses but, then, they will be in distance mode," said Manjulika Srivastava, director, DEC.

Abhijeet Das, senior admissions coordinator at the school, admitted that the MBA course was a “distance education programme".

Delhi Business School and the International Institute of Business Management on Delhi-Mathura road also offer MBA degrees through the so-called distance mode but advertise them as “full-time".

Officials at both schools confirmed that their programmes were “distance" ones.

Yadav said AICTE is making its approval process for private schools even more stringent, with a uniform calendar for PGDM programmes, standard nomenclature for all management courses, even unique enrolment numbers for students to check “excess intake".

“We also want all state governments to initiate action against such institutes, since several fall under their jurisdiction," added Yadav.

He claimed AICTE’s efforts have made a difference. “In many cases, B-schools listed by AICTE as running unapproved programmes have either shut shop or shifted to different locations."

In one of Rohini’s residential pockets, shopkeepers still point to a dull white building in response to queries about the Sanjana Institute of Management Studies. After being listed by AICTE as an unapproved B-school, the institute closed down. No one knows what happened to the students.

Poornima Mohandas in Bangalore contributed to this story.

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