If the proposed bill on Indian Institutes of Management (IIM) is used to bring about centralization of key processes, it would be bad news for these institutions and their autonomy, believes Ashish Nanda, director of IIM Ahmedabad (IIMA) India’s best-known business school. In an interview, he said some people have concerns not about what is written in the bill, but how it will be implemented. Nanda spoke about his vision for the school, and his efforts to take it to the global stage. Edited excerpts:

When you joined IIMA, people thought it’s the first step to internationalization... How is it progressing?

We try to ensure that our students view and experience the interconnections that link enterprises and people across the world. We encourage our students to go on exchange programmes to other schools abroad and have students from those schools come to IIMA. Last year, approximately 130 of our students went abroad and approximately 80 students came from abroad. The exchange programme works well with schools in most European countries because their terms and our terms match. It does not work as well with US schools because terms do not match as well. To encourage visits to and from North American universities, we have introduced immersion programmes, which are shorter, intense immersion experiences. We plan to publicize the PGPX (one year post-graduate programme in management for executives) programme more aggressively internationally—not only for Indian-origin students but for students in general. This will lead to some more international students coming.

Are you creating supernumerary seats for international students?

In the PGP programme, thus far we were not allowed to select international students beyond some limited categories, such as NRIs (non-resident Indians). We requested our board and the government if we could create supernumerary seats, i.e., keep the PGP class size intact, but add up to 10% additional international students. The board and the government agreed. This year, we have just done some alpha testing; next year, we plan to roll it out more comprehensively. We are not targeting a number, although there is an upper cap to the seats, which is 10% of the class size. We are very clear that the international students we select should be of the same quality level as the domestic students we select in our PGP programme.

Any geography you are targeting for international students?

We are not targeting a specific geography as yet… they would come mostly from the littoral states of Indian Ocean, e.g., English-speaking parts of East Africa, the Middle East, Saarc (South Asian Association for Regional Cooperation) nations, and Southeast Asia. They will find this an intriguing opportunity. However, we do need to publicize this programme for interested persons to apply.

How are you internationalizing the faculty?

We have 95 full-time faculty members at IIMA. Of these, only three are international. The major constraint to recruiting world-class international faculty is that the compensation of faculty members in India is much lower as compared to that in top international universities. To partially bridge the gap, we are requesting organizations and alumni to support endowment of chairs and fellow positions. I hope the result of this will begin to show in another 12 months.

The L&T chairman has become the chairman of your board again. What can IIMA leverage from him and his companies?

To have someone like him (A.M. Naik) chairing the institution gives us the opportunity to do two things. One, he maintains a close touch with the ground realities of business. One of our key challenges is how relevant our work is to the practice of management. People such as he, and others, such as Mr Pankaj Patel (chairman and managing director, Cadila Healthcare Ltd, and Mr D. Shivakumar (chairman and chief executive officer, India Region, PepsiCo India Holdings Pvt. Ltd), on our board ensure that we maintain relevance. Two, we are trying to strengthen our connect with the world of practice. We are trying to strengthen it by growing our executive education; increased case writing, having people in practice come to our class, and having them contribute financially to the institution. Mr. Naik and others on the board have been terrific in talking to those in practice and bringing them on board as our partners.

The government is bringing an IIM bill. How beneficial or challenging will it be for IIMs?

Assuming the bill is very similar to the draft that was shared with the IIMs, I think the IIM bill would be beneficial—it allows IIMs to grant degrees as opposed to diplomas. That’s less of an issue for an institution like IIMA because we have an established reputation, but some of the newer IIMs don’t have to go through the rigmarole of having to convince potential recruiters and other academic institutions that their PGDM (post-graduate diploma in management) diplomas are “as good as" MBA degrees. The IIM bill also provides a platform for the various IIMs to talk to one another and learn from one another.

The concern some people have with the bill is less about what is written in it and more about how it might be implemented. The bill is good if it encourages best-practice sharing and coordination; not so good if it reduces autonomy and discourages innovation. If the bill is used to promote centralization of processes such as choice of curricula and selection of faculty, that would be bad news. Then, people leading the IIMs would feel disempowered and less responsible for performance of their institutions. It is important for overall excellence that the government allows various IIMs to learn from one another, but also give them room to experiment, compete, and lets the stronger institutes benefit from superior performance. If the IIM system becomes too centralized, we might avoid some wasteful duplication, but we might also lose out on experimentation.

Several voices are coming about the need for fee control. What’s your view?

I have not heard those voices from the government. However, I do hear occasionally populist claims often made by “concerned individuals" who don’t just belong to the government about the “outrageous fee" being charged at the IIMs and the need to immediately bring that fee under control.

How do we determine whether the fee charged is reasonable or unreasonable? One metric is return on investment. Last year, when The Economist ran such a metric for business schools worldwide, IIMA came out the fourth-most economical school in the world. Another way is whether any deserving student is unable to attend an institute because of fee considerations. Several commercial banks compete head-over-heels to provide loans to IIMA students, as they see those as some of the best quality loans they can make.

Capping IIMA fee at some level below cost to make it “affordable", as some have suggested, would be an extremely regressive form of taxation. If we artificially reduce fee for all students to below cost and have government cover the shortfall, then the general public, most of which is relatively poor and whose money the government is spending, would be subsidizing MBA students who are going to shortly become high-income upper middle-class executives. Why would such an approach ever be considered fair? I think the topic of fee capping is a red herring. If fee are capped to below cost, you are making IIMs financially unviable, thus forcing them to rely on external financial assistance. Financial subsidy does not come without strings; with the influx of subsidy, your autonomy goes. When we strive to retain the right to determine our fee, in the shadows of that debate is the real struggle: our commitment to retaining autonomy in running our institution.

What are your views on government oversight of academic institutions?

Generally speaking, I believe government is most effective when it takes on the role of a wise overseer from a distance, setting targets for institutions and evaluating how they are doing against those targets. The moment government starts micro-managing how things are being done, effectiveness suffers. Government neither has the capacity nor the specific knowledge to manage effectively on a sustained basis. If there is frequent interference from government in running institutions, people in leadership of the institutions who have specific knowledge begin to feel disempowered.

So, if you truly want institutions to flourish—and this is not only true of IIMs but for every academic institution that operates under governmental oversight—my view is the government should give them a lot of operational autonomy, but hold them responsible for results and reward them commensurate with the results. The alternative approach—of managing the specific issues that institutions are facing and supporting them based on need without looking at results—might make government more proactive, but is ultimately more inefficient.

Following that approach, institutions become needy. They spend far too much time and energy in explaining to government why things are not working well and why they must be supported and officers in government spend far too much time micro-analysing and addressing specific problems. Instead, government should encourage institutions to do the best they can with the resources they have, hold them accountable for the results they achieve, and reward them accordingly.

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