The Hindu Business Line : Why cutting IIM fees makes no sense at all

The Government's slashing of fees at the IIMs at a time when it has been urging universities to raise their fees and become self-reliant makes little sense, especially as the move is in no way going to make such education more accessible to people in the true sense.

THE slashing of fees at the IIMs has sparked a raging controversy. Expectedly so. Some 10 years back, the IIMs had a fee structure that has been suggested now. But it was decided to raise the fees. And there was a national consensus. The fees have been cut now though nobody was demanding it. Not even the students of IIMs, who are the beneficiaries.

It is not clear why there was this hurry in implementing the U. R. Rao Committee Report while many such reports rot in government offices without any action being taken. The least that the Government could do is to have a proper consultation with all the stakeholders if not a national debate.

The Rao Committee suggested linking the level of fees with the per capita income of the country. It suggested that since in the US the average fee in premier institutions is about 30 per cent of the per capita income we should adopt the similar level.

However, the situation in the US is very different. In the US, almost every child goes to school and, therefore, is a prospective candidate for such technical education. In India, a huge section of the population is illiterate. Thus, the per capita income, which also includes the income of the poor people, is no criterion for deciding the fee structure of a premier institution like the IIM.

This is, however, not to say that it would be an appropriate criterion if there is no illiteracy or poverty. As against basic education, higher education is definitely not a necessity. Especially in the case of technical education, students themselves see it as an investment and the returns from such investments are quite high.

It is not that poor students if selected for IIMs cannot study if the fee is very high. There is no market failure here that the Government needs to correct. Banks are happy to extend loans to IIM students who expect high-paying job offers even before they complete their education.

It is also not the case that a lower fee structure will in any way help students from relatively poorer sections of the population to enter the IIMs. Entering such institutions will definitely require exceptionally good school and college background.

Thus, the present move will help only the elite. Moreover, it has now become difficult to qualify for IIMs or IITs without taking some specialised training for which many private institutes have come up over the past few years.

The present move is in no way going to make such education more accessible to the common people in its true sense.

The U. R. Rao Committee recommended such measures ostensibly to spread technical education. However, the responsibility of spreading technical education will remain, by and large, on private institutions. Only in a few government-sponsored institutions will students get education at low fees.

The mushrooming private institutions will continue to charge high fees. Many such institutions, however, charge unjustifiably high fees, and do not have proper and transparent procedures for selecting candidates for admissions and do not keep the promises they make in many other areas. Unfortunately, there has not been any substantial progress in regulating such institutions.

There could be another reason for subsidising such education, that is, the private costs are much higher than the private benefits and/or social benefits outweigh the total costs. However, there is no such logic for education at the IIMs. Even at the existing fees, most students are able to recover the costs they incur in their entire programme, including even their living expenses, within just one year.

Ironically, the Government has been ignoring education and research in social sciences where private costs are much higher than private benefits. Thus, the Government needs to subsidise education and research in such areas.

In most universities, humanities and social sciences departments now do not have adequate infrastructure for giving education or carrying out research because of poor funding. So much so that those who are genuinely interested in pursuing education or research in social sciences prefer to go abroad if they can afford to.

This can harm the country in the long run as very often knowledge in these areas is not value or ideology free. Students trained abroad in these areas may develop perspectives which may not be appropriate for the country. The Government, however, has been pressuring universities to raise fees and become self-reliant though neither the teachers nor the students are in favour of it.

The IIMs and other premier institutes are worried. It may be the beginning of the erosion of their autonomy. Next, the Government may seek to dilute their admission requirements.

Worse, they may even ask to introduce quotas. In any case, one fails to understand why the Government thought it necessary to slash the IIM fees, which implies more government support for them, when it is not able to provide adequate funding for programmes like Sarva Siksha Abhiyan.

(The author is with Consumer Unity and Trust Society (CUTS), Jaipur, a leading research and advocacy group working on trade and economic issues. The views are personal.)

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