World class institutes have always exercised autonomy; whether from the private sector or from the government. The IIMs (Indian Institutes of Management) are India's only world class institutes in business.
The government seems bent upon removing that autonomy. That is the basic issue.
The fee reduction is only one of a series of actions in the last three years. First, the Bharat Shiksha Kosh was set up to 'channel' all funds to IITs (Indian Institutes of Technology) and IIMs through the government.
This had the desired effect of drying up all alumni and industry support and grants to these institutions.
Next, the process of appointment of directors was suddenly changed. Unlike the old system where the board of each IIM recommended a few names to the government, now the government has a standing committee headed by a bureaucrat, and directors have to 'apply' and go for 'interview' to Delhi.
Recently, the government sought to use the CAT (Common Aptitude Test) leakage to issue orders that CAT will now be conducted by the government. It has also sought to change the MoUs (Memoranda of Understanding) signed by the IIMs with the government giving arbitrary powers of interference to the government.
Some of the IIMs have so far not signed the MoU. They are now being told, in a veiled way, that unless they do this, they cannot get government funds.
The government has also said that the class size in the IIMs must be raised. There is also a strong move to do away with interviews and group discussions in the admissions process. Apparently that is only okay for selecting IAS officers, but not for management graduates.
Most probably, next year there will be interference in the academic curriculum if one is to go by the minister's recent statements on television.
The government has also asked IIM-Ahmedabad, IIM-Bangalore and IIM-Calcutta to reduce their corpus to Rs 25 crore (Rs 250 million).
This clearly shows that they do not want these institutions to be autonomous. The fee reduction, which most probably will not be compensated by an increase in grants, will force these IIMs to eat into their corpus.
The fee reduction has completely paralysed the IIMs. On the one hand, they cannot raise funds because of the Shiksha Kosh. On the other hand they cannot charge appropriate fees. Now government grants are tied to the MoUs.
Some arguments have been used to buttress the government position. First is the U R Rao report which tied fees to 30 per cent of average incomes and teaching loads to mediocre polytechnics in Europe and the United States.
Subsequently U R Rao said that his report was not for the IIMs.
The government has also said that poor students cannot join IIMs with the 'high' fees. However, scholarships and loans are very easily available to all students, and this is advertised in the 'Admission Notices' also.
If the government is really interested in poor students, they can directly give scholarships to admitted students.
Also when there is a funds crunch for primary education, how can we justify subsidy to IIM students who will work for multinationals?
The government has also argued that faculty student ratios are very high compared to other business schools overseas, that class (or rather batch) sizes are too small, that faculty teaching loads are very low and that research at the IIMs is not up to the mark.
The government has not taken into account the teaching in the PhD programmes, in the executive programmes (well over a 1,000 executives per year at the first three IIMs), and programmes in public policy, software management and the agriculture programs.
If we take into account all this additional teaching the faculty-student ratios are all right and so are the teaching loads.
There is, however, some merit to the argument that student batch sizes are too small and that research needs improvement.
On batch sizes, there are two problems. One is placement for the extra students is likely to be a problem and in the long run will erode the brand image of the IIMs. But to be fair, there is scope for increasing the number of seats.
Second, there is already a severe problem in attracting and retaining good faculty. With all the negative publicity and erosion of autonomy, the IIMs will find it very difficult to recruit top quality faculty.
The IIMs need to improve their research record, but the current moves by the government will ensure that they go in the opposite direction and become dull teaching shops churning out outdated text book material. The soul will be lost.
What is distinctive about the IIMs and their teaching? Several things go into this.
First, is the quality of the faculty. Several of them are outstanding and could be placed anywhere in the world. For them teaching is perhaps a calling rather than a job. Not all faculty may be of that standard. But even a few such make a big difference.
For instance, lecturers attending a one-year faculty development programme at one of the IIMs said: "Professor so-and-so's classes make this one year worthwhile."
Students have written poems, brought out T-shirts and held conferences in honour of some professors, and used adjective like 'legend' or 'God' to describe some of them.
Second, this quality of teaching is nurtured and supported at the IIMs and is a core value. Peer esteem rather than administrative rewards from directors or deans drives faculty to strive and maintain excellence.
Third, the IIMs facilitate active interaction with the industry through case writing, executive education, workshops and conferences. This brings a richness and variety to the MBA classroom that students and recruiters value.
Another very important issue here is faculty autonomy.
Faculty decide the curriculum, the pedagogy, the teaching material, the evaluation and the grading of students. The sense of ownership and pride that faculty have makes or breaks the quality of the course they deliver.
The teaching materials are not always standard text books, but include cases, teaching notes of faculty, papers and articles -- which are again chosen by the faculty concerned.
Finally, it is that hard-to-define, but strongly-felt culture of these IIMs.
There is a sense of freedom, there is no boss: the director cannot and never does give orders to faculty. Those who have tried have found to their cost that is does not work. The culture can perhaps be best described by the term 'faculty governance.'
This is not some kind of lawlessness or license to live off the fat of the land. This faculty governance is tied to a higher standard by peer culture. Someone who slackens off becomes a bit of an outcast.
Today, the external opportunities also act as a spur to excellence. Those who do not perform well lose out on teaching, research and consulting opportunities within the country and overseas.
Three issues remain:
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i) Why is autonomy desirable?
- ii) Are IIMs a law unto themselves and cannot be held accountable by anyone?
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iii) What are appropriate means for holding them accountable?
(i) Autonomy is desirable because higher education is a specialised field and cannot be left to generalists. This is precisely why the Indian Space Research Organisation is not under bureaucratic control. When generalists prescribe, they go off the mark.
Autonomy is also important to decide the mix of teaching and research, the different programs that the IIMs run -- the MBA, the PhD, the executive programmes, and in some IIMs, programs for software management, public policy, agriculture and so on.
Autonomy also allows the IIMs to enable faculty to interact with industry through travel, workshops, conferences and consultancy.
Without that interaction, the IIMs would become text bookish, dry and conceptually outdated. It allows faculty to do research in collaboration with colleagues at the IIMs and overseas. Under the new dispensation, this has to be cleared by the government.
Lastly, a small but important point: if we are to attract and retain the brightest and best in academics, we need to give that degree of freedom. In any case, academics in India are underpaid compared to the industry and to teaching assignments overseas.
Without that freedom, the best will simply leave -- either to the industry or go overseas.
Unfortunately, that trend has already started and will continue.
(ii) No one can argue that the IIMs are a law unto themselves. They are part of the society, get taxpayers' money and are accountable to the society at large.
However, let us not confuse accountability with control of a few individuals in the government. These are two completely different things.
To put this in perspective, MIT (Massachusetts Institute of Technology) receives 70 per cent of its grants from the United States government, but is a private, fully autonomous university. Government money does not mean government control.
(iii) Some of the best ways of ensuring accountability are:
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To make all major activities and financial statements of the IIMs public.
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Strengthen external, neutral (non stakeholders) agencies to rate of evaluate the IIMs. The current Business School ratings are a poor imitation of what needs to be done.
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Strengthen the boards so that they can govern properly rather than mutely watch government diktats.
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Tie funding to performance.
Currently the government is not doing that: it is giving prescriptions, rather than saying to the IIMs, "You are not delivering what we want. So we will stop funding you." A greater degree of maturity and insight is required to set things right.
Even if we want to improve the IIMs (and they need to), the current prescriptions will have the opposite effect.
The simple method of monitoring outputs and performance -- rather than inputs like salaries, teaching loads, class sizes, fees -- is the best method of ensuring improvement.
Trilochan Sastry is a professor at the Indian Institute of Management, Bangalore. An alumnus of IIT Delhi, he did an MBA from IIM-Ahmedabad and a doctorate from MIT, Cambridge, USA. He has taught for 12 years at IIM-Ahmedabad and has now moved to IIM-Bangalore. He has also taught in the US, Hong Kong, Japan, Sri Lanka, Kenya and the Indian School of Business at Hyderabad.
