Partha Mukhopadhyay: The case for need-based funding

Instead of subsidising IIMs, government can educate 3.5 lakh children

The "order" fixing the Indian Institutes of Management's (IIMs') fee at Rs 30,000, rather than an "exorbitant" Rs 1,50,000, draws on three lines of argument to justify the decision.

First, the maintenance and developmental expenditures of these institutes are borne by the Central government; second, the observations made by the Supreme Court in the TMA Pai case that fees must be for the purpose of furthering the objective of educational institutions; and third, the recommendations of the U R Rao Committee on making technical education affordable to capable, but poor students.

Since then, HRD Minister Murli Manohar Joshi has questioned the accountability of the IIMs and has even insinuated that the financial accounts may be suspect, notwithstanding the fact that they are adopted each year by a governing body with numerous government appointees.

The position papers prepared by the faculty of the three older IIMs (at Ahmedabad, Bangalore and Kolkata) reject all three premises. They argue the government only meets a third to a quarter of their expenditure (not that paying the piper should allow you to call the tune in education); the fees meet the Pai test by a wide margin; and financial assistance makes the fees affordable to all and that no student has been denied an IIM education for lack of funds.

They strongly protest that the order affects the autonomy of the institutes and that it failed to follow due process. They contend that the allegations on lack of accountability are ill-founded, and the international recognition of the IIMs clearly demonstrates that they have fulfilled and even exceeded their original goals. They, along with Bimal Jalan, in his recent convocation address at IIM, Ahmedabad (IIM-A), maintain that the "across-the-board" nature of the proposed subsidy is wasteful and inefficient.

Ordinarily, it is the prerogative of the government to balance competing interests for public subsidy, but what is the compensating public benefit from the IIM fee subsidy? When fees were low, a fifth of the students came from families with below-average incomes. This proportion has not changed with the increase in fees and, thus, may not change with their reduction. Nor has it discouraged applicants. From 1993 to 2003, the fees rose more than six-fold, and applicants increased six-fold too.

Last December, the governing body of IIM-A had requested the government not to provide any further grants starting this year onwards. The faculty of IIM, Bangalore (IIM-B) has made a similar suggestion.

Indeed, a case can well be made out for removing government support from the three older IIMs. Adding the Rs 26 crore saved by not implementing the fee cut for the 2,200 IIM students "" and this number is rising; the student strength in IIM-A's post-graduate programme has risen to 500 this year, up from 360 two years ago "" this could save Rs 50 crore a year.

Joshi argues that the amount is minuscule. But the fact is that this trifling sum can educate over 3.5 lakh school children a year or a lot more under the Sarva Shiksha Abhiyan or pay the electricity bill for over a million (that's right!) poor households under the Kutir Jyoti programme with one bulb in their homes, perhaps enabling their children to study and do well in school and eventually aspire for the IIMs! Or consider the fact that this sum can service over Rs 500 crore of public debt at current rates, which could build at least five more IIMs, and may be even more.

Today, the older IIMs can be financially independent and simultaneously assure financial support for every student who needs it, if they are allowed autonomy and given, among other things, the ability to set their own fees. The boards of governors of IIM-B, and one hopes even IIM-C, are still in the process of drafting resolutions that take the interests of all stakeholders into account.

 In public interest, they might want to consider the draft (see below) and help to finance the education of 350,000 poor children or light the bulbs in a million poor households or build five new IIMs (if the faculty could be found for them!).

 

Draft resolution for the IIM board of governors
The Board is sovereign in all matters related to the governance of the institute	The board of governors would like to reiterate its complete faith and conviction in the procedures and tradition through which the institute has been governed and assert its sovereignty in all matters related to the governance of the institute, including in particular, academic, administrative and financial matters, subject only to the will of the society and the laws of the land.
Fees are used for furthering the object of management education	The Board notes that the income from fees and support from the Central government meet only a part of the costs of the institute. The fees are thus clearly being used for furthering the object of management education.
Appreciation for the role of the Central government and request to discontinue further financial support	The Board appreciates the role of Central government grants in bearing the bulk of the maintenance and developmental expenditure of the institute in its formative years and appreciates the continuing contribution of the Central government towards a portion of these expenditures even today. However, being mindful of its current ability to continue its activities without such contribution, if allowed to function in a financially-autonomous manner, the institute requests the Central government to discontinue its financial contribution to the institute.
Ensuring that sufficient financial assistance is available to all existing and entering students and that information about such programmes is disseminated widely Contribution of the faculty in knowledge generation and delivery and the growth of the institute's corpus	The Board appreciates the concern of the Central government that education should not be unaffordable to capable but poor students. The institute  has had a financial support programme in place for a number of years. However, it appreciates that information about the programme may need to be more widely disseminated through more extensive outreach and that the programme could be expanded. To this end, the Board charges the administration of the institute with ensuring sufficient financial assistance towards fees and any additional charges necessary to take full advantage of educational opportunities at the institute are available to every existing and entering student who requests for it and that information about such programmes is disseminated as widely as necessary.
Continuance of existing fee structure	The Board applauds the contribution of the faculty in creating an environment that supports the generation of knowledge and delivery of international quality education under challenging conditions. It recognises their pivotal role in the growth of the institute's corpus, income that enables the institute to generate

Of course, the government could instead choose to overrule them and insist on subsidising 2,200 students, who will earn average incomes of over Rs 6 lakh a year, about 30 times our per capita income. After all, it is sovereign.