IIM FEE REDUCTION - RIGHT STEP, WRONG VIBES

Indian Institutes of Management (IIMs) have been directed to reduce their fees. This has been seen as an attack on autonomy of these institutions. An article that analyses the decision and also tries to understand the genesis of protests.

There is a couplet in Hindi (or is it Sanskrit?) saying that a bottle of milk in the hands of a toddy-seller is seen with suspicion. Nothing illustrates this better than the loud protests generated over the directive of Ministry of Human Resources Development (MHRD), Government of India to IIMs to cut fees.

Indian Institutes of Management (IIMs) have been directed to cut their annual fees from Rs. 150,000 to Rs. 30,000 per annum per student. Normally, this should have been welcomed considering that a vast majority of Indian population has annual income of less than Rs. 30,000. In fact, one would expect the political class to be out on the streets demanding that the fees ought to be reduced even further to a level that the vast majority can afford. Surprisingly, there has not been a single statement from any political leader (not even from BJP) supporting the ministry's move. Dr. Murali Manohar Joshi, Minister of Human Resources Development, finds himself cornered and painted in the darkest possible shades for an action that should have won him accolades.

Let us look at the facts. It costs about Rs. 300,000 per annum for teaching a student at one of the IIMs. This does not include return on investment that the promoter of IIMs (Government of India) should normally expect. Let us hypothetically assume that IIMs were auctioned to the highest bidder with due consideration for goodwill of the IIM brand. The new owner operating in a businesslike manner without any government support and with reasonable expectation of return on investment would be surely forced to charge fees amounting to not less than Rs.600,000 per annum.

IIM fees, till recently, were about Rs.150,000 per annum. This amounts to a subsidy of about Rs. 450,000 per annum per student. The key question facing us is whether the subsidy level ought to be Rs. 450,000 per annum or lower or higher.

It has been argued that at the present fee level, the institute can break even on cash basis by subsidizing from the consultancy income. But that is just a clever ploy to camouflage subsidies. It is strange that the ones who shout against all subsidies are the ones who resort to this clever ploy.

There are others who argue against reduction of fees (as directed by MHRD) on the ground that it will reduce the autonomy of these institutions. Autonomy is desirable and can come only from a sense of discipline imposed on political and bureaucratic class. It is beyond any logic to argue that there will be autonomy at the level of subsidy of Rs. 450,000 per annum and not at the level of Rs. 550,000 per annum.

Students and faculty of IIMs have pleaded that there has not been even a single case of a student getting admission but failing to pay fees. Their argument is that adequate loans* are available for those who cannot afford to pay the fees. The academic community, surprisingly, does not base its contentions on any academic studies of the potential students. Looking at the present students and making observations displays an unscientific approach to the problem. If their line of argument were to be accepted then it would make sense to increase the fees to Rs. 600,000 per annum. This would be a case of perfect inelasticity of demand. In other words, IIM faculty and students are pleading that demand for IIM education shall remain completely unaffected even if the price is increased to four times its present level. This is absurd and must be supported by exhaustive studies to be accepted.

If MHRD accepts the theory of inelasticity of demand and orders fees to be fixed at Rs 600,000 per annum, the protests will be much stronger than the ones at present. It seems that Rs. 150,000 per annum is a magic figure, with which the upper middle class target audience is comfortable. So there is pressure to keep fees pegged at this level - neither higher nor lower.

There are also those who argue that higher education subsidies eat away the funds that could have been spent on primary education. Even this set baulks at complete elimination of subsidies and raising fees of IIMs to, say, Rs. 600,000 per annum. Apparently, subsides are fine if they bring education to the reach of upper middle class, but are a no-no if education is made affordable for the poor.

From a social perspective, higher education is not just a means for individuals to increase their earning capacity. A society invests in education for two reasons - (a) it increases technical and managerial capacities of the society as a whole and (b) it provides a social ladder through which the talented youth from poor and oppressed sections of society can rise up the social hierarchy. In post-independence India, higher education has served both these roles very well. The growth of the country as an industrial and service economy would not have been possible without the capacity building by institutions of higher education. On the other hand, education has inspired hopes in the hearts of the poorest of poor. A poor young boy or girl only needed to study hard to lift him or her self out of poverty and misery. If he or she failed to make the mark, there was a reasonable justification. It is difficult to imagine the social tensions that would have ensued if the youth of post-independence India had no hopes provided by the social ladder of education.

Government of India has the authority and duty to act as a representative of Indian people and society. In this capacity, the Government must take decisions, on one hand, for building nation's technical and management capabilities, and on the other, for providing a social ladder for poor and under-privileged sections of society. Autonomy of educational institutions cannot override this duty and right of the Government. This sovereign prerogative is available to the Government even in case of privately owned educational institutions. For example, recently, private schools in Delhi were ordered to admit a specified percentage of students from poor families without charging any fees. It is preposterous to suggest that the Government give up its sovereign prerogative in case of IIMs just because they are able to manage without funds from the Government.

MHRD's directive to IIMs is obviously intended to provide a social ladder to students from lower middle class families. This ought to be welcomed. Yet, there are loud protests. Probably, the protests have more to do with the corner in which BJP and Dr. MM Joshi have been pushed into rather than with the decision itself.

The general impression is that BJP hates anyone with gray matter between the ears. RSS ideologues routinely criticize all those who have fancy degrees. I had the misfortune of once sharing the dais with a so-called educationist of Sangh clan. The occasion was a seminar on educational reforms attended by academicians from various universities. The gentleman, who started his professional life as a RSS pracharak and had at that time hundreds of RSS controlled schools under his charge, went into a long diatribe against all those who had high qualifications. The audience was dumbstruck. I was shocked and angry. But he was unfazed. He had just mouthed what had been drilled into him for years.

RSS has always believed that a political organization is built on the foundation of relationships of hearts. The corollary of this has been to ignore and even distrust anyone who has a head on his shoulders. Over time, the mistrust has become mutual. Dr. Joshi is just reaping the fruits of this mistrust nurtured over decades by both sides.

When there is mistrust, everything that one does is viewed with suspicion and this becomes a vicious circle. It has not helped Dr. Joshi that his ministry, like almost every other, is lorded over by IAS officers who enjoy showing their supremacy with a cockiness that irritates everyone. In fact, the demand for autonomy of educational institutes is a revolt against this breed of generalists who pose as experts of all that comes their way.

It has also not helped that Dr. Joshi had to often yield to pressures from Sangh clan to accommodate mediocre nobodies for appointments to boards of various institutions. This is best illustrated by the fact that whenever Dr. Joshi is attacked politically, whether on charges of saffronisation of education or in the recent controversy, no one from the people appointed by him on political grounds has ever risen to defend his point of view. Dr. Joshi fights a lone battle because, by and large, his political appointees are incapable stature-less persons who have no other qualifications except that of having served the local RSS or BJP bosses. Needless to say that such appointees have added to the negative feelings against BJP in academic institutions.

The protests against MHRD's decision to reduce fees of IIMs should be seen in the light of anti-BJP and anti-Joshi mood at most elite campuses. Yet, it was possible to build confidences and allay fears. The decision to reduce fees could have been taken four or five years ago. The reduction could have been phased - say 20-30 per cent every year; during this time, the grants to the concerned institutes increased gradually to build confidence. India has a scientist as the President. But, secretary (education) is not an academician. Secretary and joint secretary level appointments in MHRD could well have been made from the academic community. Unfortunately, none of these was done and the decision to reduce fees at IIMs has come as a bolt from the blue. Obviously, Dr. Joshi has been advised badly. As a minister, he is responsible for policy directions. The implementation rests with his officers, who have failed him.

In terms of policy direction, one cannot fault Dr. Joshi for reducing the fees at IIMs. In fact, it stands to reason that both at IITs and IIMs, the fees should be reduced further to make them affordable by the poorest of poor. It was not long ago that IITs used to charge Rs. 200 per annum as tuition fees. India can afford to subsidize a handful of nurseries of talent. If funds are indeed a constraint, let there be no more IITs and IIMs. But it is dangerous to suggest that nurseries of talent be converted into shops of knowledge. A talented person, if not nurtured properly, can be dangerous. Society cannot afford to take such a risk. One wonders if BJP and Dr. Joshi realize this.

Probably, Dr. Joshi is also hoping to get some electoral mileage by his decision to reduce fees. This political direction or agenda is, however, not shared by his party. BJP, as a party, has failed to demonstrate any level of commitment to Dr. Joshi's policies. Either IITs, IIMs and even universities are non-issues for BJP leaders or internal group politics of BJP has prevented BJP top brass to rise up in support of Dr. Joshi. Let us not exert our minds in understanding the minds of BJP leaders.

We can, however, make an effort to help Dr. Joshi implement a policy initiative that is indeed commendable. In spite of the bad vibes about him and his party, let us not lose sight of the fact that he has taken a step in the right direction.

It is ironic that Dr. Joshi has been painted as toddy-seller while he has been holding a bottle of milk in his hands. Yes, some of his associates and officers are responsible for this. May be we should help him rise above those who have failed him! May be we cannot do that! But, surely we can resist the temptation of going for his head.

* Loans for education are offered by many banks. Almost every bank manager, who grants an educational loan, asks the beneficiary to arrange for collateral security. Students from poor families with no landed property are hence unable to take advantage of such loans.

ANIL CHAWLA is an engineer (and now a lawyer too) by qualification but a philosopher by vocation and a management consultant by profession.

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