The recent fee hikes by all six Indian Institutes of Management (IIMs), and particularly the tripling of fees by IIM-Ahmedabad, seems to have caught the ministry of human resource development napping. That would be unremarkable. But the ministry has raised a belated objection, and this brings out the continuing disconnect between the country?s premier business schools and the government. The last time there was a spat between the ministry and the IIMs was in 2003, when the NDA was in power at the Centre. Back then, the ministry had wanted the institutes to lower their annual fees to a paltry
Rs 30,000 on the plea of ?inclusion?. It was an encroachment on the autonomy of the IIMs then, and it is an equally unsettling intrusion into their affairs now. The fact is that the IIMs are fully empowered to decide on their own fee structures without bowing to any political diktat of the government of the day. By demanding that the IIMs explain the rationale of the fee hikes, the human resource development ministry is brazenly playing to an ?aam aadmi? political constituency, and that, too, in a manner that does its regard for propriety no credit.
In any case, the aam aadmi shall not have to suffer once the hikes go through. Banks will fall over one another to offer education loans to anyone smart enough to gain admission to an IIM. In fact, it is the rationale for subsidising prestigious B-schools that turn out bulge-bracket earners that needs to be questioned. It is about time that government funding was cut off for institutions and establishments that can find plenty of alternatives. Market forces must be allowed to determine the fee structures for educational units that are now well integrated with the market system (and if the IIMs are not, then nobody knows what are). Back of the envelope calculations show that IIM-A spends around Rs 3.5 lakh per year on a student enrolled for its two- year PGP course. So, if the institute has decided to hike its fees from Rs 4.25 lakh to Rs 11.5 lakh, it?s well within its rights to do so. Also, if the institute wants to test what premium it can command as an educational brand, it should go ahead. Moreover, it takes money to attract and retain top-notch faculty. Give the IIMs freedom over pricing.