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With Best Wishes and Regards,
20 February 2004
Anil Chawla's article IIM FEE REDUCTION - RIGHT STEP, WRONG VIBES is an excellent piece. I hope the first reactions of most IIT-IIM akumni would be watered down. I saw a similar arguement in CNBC's programme last night hosted by Govindrajan Ethirajan. Only one person had similar arguement. All others seemed to have been on MMJ bashing mood. But I think the tribe will grow.
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Your logic sounds good. But the question that I have is
Why not Government develop high quality institutes such as IIMs or atleast provide proportional to the difference amount (150000-30000 = Rs 120,000) free (with an agreement of x number of years the student will work for India after graduating from IIM) depending on how much a poor student deserve?
I agree with many of the points mentioned in your article such as affordability of management education provided by IIMs for poorer sections of society. But will the across the board cut in the IIM fee make it affordable to poor. I am afraid it will not. It will only serve subsidizing IIM education for rich ( I mean those who can pay). Reasons for this are:
What is the point of making last storey very affordable to poor when in fact there is no ladder for them to reach there. If at all efforts are to be made then efforts should be made that more no. of poor but deserving students clear CAT exam. The issue of fee can come only after that.
Second point that I have is why should there be across the board subsidy. Those who can pay why not a reasonable cost of education (say 40-50%) be recovered. Most of these across the board subsidies end up subsidizing rich in the name of poor. In fact for poor students even Rs 30000/ will also be high. For them there should be a complete fee waiver (In present circumstances, there are not going to be even 10 to 20 % students who cannot afford Rs 1,50,000. Why shouldn't rest (80%) be charged this level of fees?
Prof. Rajesh Dixit is Professor of Management, National Institute of Technical Teachers Training and Research, Bhopal. He has done Ph.D. and M.Tech. from IIT Bombay.
When I joined IITM in 1964, the fees were highly subsidized that was the reason I could afford IIT education that time. If the fees were not subsidized I am sure many of us could not have joined IIT at that time, even the most vociferous critics of the GOI like Mr Rambo??
You are right, what is wrong is the timing of the whole thing. The issue was leaking of exam question papers to start with, suddenly it metamorphised into an issue over fees. Naturally everyone has become suspicious over the motives of the government.
If it was 10 years back let us say, everyone would have clapped if the fees had been reduced. But today we are living in different times. Everyone knows that IIM graduates are getting employment for Rs 3 lakhs/annum, minimum, just on the strength of brand equity of IIMs (This was not the situation ten years back). Interest rates have come down and educational loans are being given freely by the banks. (You have mentioned below that "Students from poor families with no landed property are hence unable to take advantage of such loans". Does this apply for IIM students? Then IIM authorities have misrepresented the situation). At least in South India, I don't know how the situation is in the North, parents are mobilising large sums of money to get their wards admitted to professional courses, selling land, borrowing money, whatever. The other day I gave a lift to a nondescript farmer in my native village, he had sent his son to Russia to study Medicine spending Rs 17 lakhs, and he was upset that his son had come back without finishing his course. The capitation fees for a one year B Ed course in Kerala is Rs 50,000. A host of people I know have sent their wards to foreign countries for education or are planning to do so, mobilising money with great difficulty. So, in brief we are living in changed times. With this background, the fees of Rs 1.5 lakhs for a year in IIM is not exorbitant (Remember, this is a post graducate course, not a graduate course, as in B.Tech, IIT)...... The fees of Rs 1.5 lakhs includes everything; fees, course material, boarding,... so how come we are still talking of reduction to Rs 30,000, which is only the fees?
India is a desperately poor country. All over India poor people borrow money paying interest of Rs 3 / Rs 100 / Month. Which works out to 40% interest / year. Half the children in India below the age of 5 are malnourished - there is no point in even talking about education for these kids, before solving the problem of malnutrition. So a lot of people need help, support and subsidies. You could easily make a list of a 100 entities which need them. And here we are discussing about subsidies for a group who would come last in this list!!!
The most important reason why the government should not interfere in this matter is that the Kurien committee appointed by the Govt had recommended gradual increase in the fees to make the institution self-supporting and independent. The recommendation was accepted by the government. As a general policy, after the financial meltdown of 1991, the government has been advocating a policy of reduced subsidies. Once a policy decision is taken, any exceptions should be thought out very carefully. You just cannot Flip, Flop and then again Flip.
Any way it is idle discussing this issue any further. The battle lines have been drawn, the Central Government has lot of funds to throw around (though all the State Governments are in deep red). There is no doubt that in a few years time the Center too will have less funds, then you will see the Flip. Shri Joshi will probably not be there at that time, so there will be no loss of face for him.
The more one thinks - the more confused one gets on this issue....it is truely a tough issue. But let us focus on the IIM issue here else the debate gets too complex.
As a tax payer (and trust me those of us involved in pure WHITE income high earning occupations - feel real dud each month when we see the outgo) - I want to know why I should fund someone else's career?
Having said that we all want good quality students to go to Hi tech places so that they provide the right young infusion in the industry and the economy. That will not happen if only the Ambani or Bajaj family kids go to IIMs.
So the question is this ---> is a fee of Rs. 3 lakhs too high for a IIM student - if he is given a loan at 8% interest rate - and payable in 3 years after passing out. I feel the answer is NO. It is not a problem considering the fact that they will earn about 10 to 15L NET in those 3 years - unless they make dumb career choices.
So, this entire debate on poor students being left out is missing out on this vital detail.
Also as a aside - let us not compare income levels when we were in college. Owning a car was a big thing then. It is a non topic today for the same "demographic set"? Going on a good vacation required money planning. Does it today for the same "demographic set"? We require money to even get good training for the IIT JEE or the IIM-CAT exams ----- are we saying that people who spend money on these "training classes" - cannot afford to pay higher fees? The logic of "poor" people getting into IITs assumes that it is possible for a person w/o the afford ability of a good school + private tution to get thru the competitive exams. So do we scrap JEE or CAT - as this puts the "city brats from affluent backgrounds" in a very advantageous position?
A quick look at those who have done well in later career will show the huge role played by school education. Many people grad from IIMs. But take a cross section of those in their late 30s (IIM grads only) and you will find that there is massive skew (in terms of industry success) in favour of those who had the money to go to a good private school till class 12.
So in fact there is a greater case for ensuring more money in basic education than in higher education.
This is one time when I absolutely refuse to agree with your point of view. Here are some of my thoughts:
I was a great fan of BJP till it tied up with Shiv Sena for electoral gains.
In my eyes Mr. Murali Manohar Joshi is nothing but a politician (you know as well as me what that means). He wants deposits in Provident Funds to get interest at 10% p.a. when the funds are not generating even 6% p.a.. This means a loss of Rs. 4,000/- crores per annum to the tax payers and will come to Rs. 100,000 crores in 20 years (compounded). Why should I or your other readers of Samarth Bharat pay for his stupid beliefs. Tomorrow he will say that tea should be sold for 5 paise per cup because many people are not able to afford the current rates.. If he is so concerned about the steep tariff in IIMs he should start by moving out of his palatial bungalow assigned to him as a minister, give up all his perks and at least half of his wife's jewellery and start a trust to help students who can't afford to join IIM. It is easy to give away taxpayers' money. Each Minister and Member of Parliament is an expensive proposition. The Home Minister and Defence Minister needs convoys of 100 cars around them to protect them. Who will protect the women of India from being raped if all the police is going to look after the Ministers? If the needless security around these stupid politicians is removed studies in IIM and IITs can be made free of cost from the savings.
And are only IIMs expensive. What about the 50 lakhs to 300 lakhs captitation fee that Medical colleges extract? Is it not hypocritical to talk only about IIM? I am sure it is just a case of the minister's nephew not being granted admission.
As to bank giving loans to those who are not able to give security what guarentee is there that the borrower will return the loan. Our banks are already saddled with 100,000 crores of bad debts. Let us not make it worse.
For 56 years we have had reservation of seats for SC ST etc. Has the benefit passed on in general to the poor. HOw many SC/ST doctors actually settle down in rural areas or treat the poor free? All one hears of is students getting bogus certificates showing them to be SC/ST.
There are more than 100 "management schools" in and around Pune charging from Rs. 100,000/- to Rs. 300,000/- per annum. If IIMs are to charge Rs. 30,000/- shouldn't these institutes be asked to charge Rs. 1,000/- to Rs. 10,000/- per annum on the basis of their standards vis a vis the IIMs. Let Mr. Murali Manohar Joshi pay them subsidy by reducing the salary of the staff members of the HRD ministry.
If IIM education actually costs Rs. 600,000/- per annum and the students are charged only 30,000/- per annum, i.e. 5% of the cost doesn't socialsim demand that they pay 95% of their subsequent salary to the tax payers.
Today's world is I, Me and Myself for most of the people. Communism has failed as has Socialism. It is said that Jyoti Basu prefers scotch to the McDowell's whiskey. It is only in a lazy country like ours people are too lazy to even shift from outdated ideas like socialism and capitalism.
For those who think 300,000 is a lot of money for a good education let them migrate to New Zealalnd and Australia. Studying wool technology costs Rs.15,00,000 per annum. IN USA too UG education costs $40,000 (Rs.20,00,000). Parents have to borrow through their noses to pay for this. Why should it come free in India. Nothing good comes free in this world. By subsidising someone else's education you are looting someone else. Every Rupee of deficit raises the price of petrol which you, I and the poorest of poor has to pay for directly or indirectly.
Why are you supporting causes which involve looting some one to help someone else? Robin Hood's intention was honourable. But neither Mr. Joshi's or yours seem to be.
IIMs were set up for a purpose. The purpose is being served well. In fact now the time has come that Government should move off and stop all subsidies to IIMs. Let the IIMs charge what ever is needed to stay financially helathy. Even if it is 10,00,000/- per annum.
And when the Mr. Murali Manohar Joshi magic wears off , please think about the following: Every year millions of children are born in India in slums, on pavements to parents who do not have enough to even feed themselves. What is the future of these children? Twenty years from now you will be writing that it is time for us to look after them. Fees in schools will actually cost 10,000 per month and the govt. will want to give free schooling. So 50 million children at 10,000 per month will cost a further Rs. 400,000 crores per annum (schooling for 8 months).
Tell me, does not an unborn child have some sort of rights. The right not to be born in abject poverty. Should not there be a law that parents who earn less than 10,000/- per month cannot conceive a child. But then how will Mr. Murali Manohar and his likes pass their time and waste ours (like I am now wasting yours, mine and that of our IIT friends).
Anil, my friend, I think it is time you stop getting carried away by our hollow politicians and their stupid arguments.
Anish Poojara is a graduate of IIT Bombay. He lives in Pune.
I agree with Anish. Let us get used to paying for what we use.
By all means, give loans freely to anyone who gets admission to IIM/ IIT or any other recognised institution. But no subsidies.
That extends to other things like electricity, water etc.
However, I think admission procedures in IIM should be changed. I am told that admission depends on marks in an English exam as well. This discriminates against many brilliant Indian kids who are not proficient in English.
PS: Isn't Murli Manohar Joshi the same guy who wanted to introduce graduate degree courses in astrology?
Nandu Madhekar is a consulting chemical engineer based at Pune. He has done his B.Tech. from IIT Bombay and has done post-graduation from USA.
Having been a part of India's transition from British Raj to Independent India and grown with IITs right from the inception and also a major supporter of globalization after we have made a foundation and seen various aspects of life - I strongly support your article and of course Murali Manohar Joshi's bold decision to cut the fee so that most of the Indian students who deserve and aspire to study in IIMs have a chance.
It is essential that the government provides this opportunity to Indians across the board and our economic structure and poverty lines prevailing cannot afford to alienate those who are good and able to provide this service to the country be eliminated through economic screens and make this subject as an elite matter.
The government can remove subsidies, disinvest in various fields excepting those like defence and railways and concentrate on education, health and other social sectors. I am glad this has been done - election or no election - even if this is an election issue and probable gain to BJP, why not if thats what the country needs.
Prof. JS Rao has retired from Department of Mechanical Engineering, IIT, Delhi.
When we joined IITM in 1964, the fees were highly subsidized that was the reason I could afford IIT education that time. If the fees were not subsidized I am sure many of us could not have joined IIT at that time, even the most vociferous critics of the GOI like Mr Rambo??
I am very happy to note that there are still some Indians left in India, thinking and writing for India.
I appreciate the way you think and the way you analyze the matter. Very good article with excellent reasoning.
Ours is the society which likes to comments and criticizes the matters without introspecting it.
Dear Mr Anil,
Right from the day one of the controversy I was awaiting for your response to the issue. Thanks for the article. The flip side was so far missing from all the discussions one heard at CNBC and the likes. I agree with you that it does not really matter whether the subsidy is 4.5 lakhs or 5.5 lakhs. It is surprising that even no one from the students has come forward to support the decision.
Kirti Ashar is a qualified Cost Accountant. However, he has developed expertise in the field of sales and marketing. He is currently General Manager (Sales) at Charak Phramaceuticals, Mumbai.
when I reflect on the cost issues, we were / are in a good position to support very bright students, one of our batchmate who is a specialist in atomic power had once considred leaving engineering college to go for work and support his family or could not support his hostel fees; he was supported by professors themselves; I think fees should come from other sources than from the srudents of exra-ordinary classes, if they can not afford... principle of deferred payments towards tution fees shall be considerd in the case of outstanding students. Fees can be fixed same depending on real costs and graded subsidy and easy repayments could be considered.
with warm regards,
For the original article "IIM FEE REDUCTION - RIGHT STEP, WRONG VIBES", Please click here.
Please write to me your comments about the above debate.
ANIL CHAWLA is an engineer by qualification (now a lawyer too) but a philosopher by vocation and a management consultant by profession.
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