April 11, 2008


Dull defence for fee hike at IIM

I generally avoid posting about current hot topic in the media as there are already enough sane voices weighing in. My two cents on a minor side issue will hardly be worth your time. But, allow me to talk about this issue.

The steep hike in fees at IIMs, predictably, was criticized by one and all. The only people defending the decision were the ones who took the decision. Even the faculty members at IIMs seem opposed to such move. Of course, on PPP basis, the fees of Rs 11 Lac for 2 yr course probably makes it one of the most expensive MBA courses in the world. And IIMs don't figure in top business schools of the world. So the criticism is not entirely unjustified. While this price tag is in the reach of only super-wealthy, IIMs have diffused the issue a bit by handing out substantial scholarships.

Two arguments provided by the camp which defends the hike. One, the cost of running the institute is high and it needs to be recovered. The institutes want to reduce their dependence on the strings-attached largesses from the govt. One alternative is to increase the fees. Second argument being since IIM graduates land up plum jobs after MBA, they should pay up for that education till last paisa.

Both arguments are wrong.

The first argument is, mostly, given by the administration of the institute. Considering fees to be one of the top revenue source is very unimaginative thinking. This revenue can grow by either increase in student intake, which is almost static for decades, or by increase in tuition fees which has to be kept "reasonable." The administration just needs to take a look around the world to understand how top institutes in the world generate the money. They generate knowledge. There is a strong emphasis on research. Harvard's HBR costs $200 in annual subscription. They don't command that price because those Fortune 500 corporations don't care if it's $200 or $2000. They do it because they generate ideas. Such universities generate enough funds from research to have a company to manage those funds. With all those brilliant, average IQ of 170, students at IIMs, the focus seems to be on creating consumers of knowledge. Institutes need to be stretch their creativity a little for better utilization of these students.

The second argument comes from the think tank outside the institute. It's too politically incorrect an argument. This line of defence is given by those wearing capitalistic hat. They want market economics at play. This line of thinking is broken as it reduces IIMs to glorified employment exchanges. In that case, I really don't want a single rupee from my tax to go to these institutes. This high-end placement agency is as useless to the country as the Govt's 5-star hotels which guzzle tons of money and are affordable to the 0.1% of the population. These institutes are not, and never, just meant to create high-end investment banking/consultancy/[current hot industry] jobs for its students. Jobs happen to be side-effect of something and the end in itself. These institutes stand for excellence, in whatever diluted form, in our country where mediocrity is norm. Their purpose is much more utopian, even though reality is far from it.

If institutes want freedom to raise their resources, good for them. But, then they can't crib about lack of funds when govt hands them money and asks to increase student intake. You can't have it both ways.


I agree that IIMs are talking like a placement agency. They are trying to make the public believe as if they take in some "dud" students with low market value and then over the two years they provide so much value that the students are marketable at 10 lakhs average salary. The IIM students are the top 1% of graduates of whoo sit for CAT and bit is but obvious they have an innate merit and value in them.

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