The Hindu Business Line : Fee hike due to cost inflation, pay panel suggestions: IIM-A

Justifying the recent fee-hike for its flagship course and other measures as “far more innovative and socially-responsible steps,” the Indian Institute of Management-Ahmedabad (IIM-A) has said that it could consider raising the fees for other courses also from next year.

On March 29, IIM-A had announced to raise the fees for its two-year Post-Graduate Program (PGP) for the 2008-10 batch from the existing Rs 4 lakh to Rs 11.50 lakh. The Union HRD Minister, Mr Arjun Singh was reported to have endorsed this hike when the IIM-A Board Chairman, Mr Vijaypat Singhania, explained the matter to him this week.

Addressing a press conference here, the IIM-A Director, Mr S.K. Barua, said the fee hike has been done taking into consideration the cost inflation over 2008-09 and the assessed increase in the burden due to the recommendations of the Sixth Pay Commission.

When asked why the other IIMs, who have not increased their fees to this extent despite facing similar financial burdens, he said the question should be asked to the respective IIMs.

Due to fresh financial burdens, the deficits of IIM-A, which has invested about Rs 90 crore out of its corpus of Rs 100 crore for creating infrastructure for increased intake of students due to extension of reservation facilities to the OBCs, is going to increase from the existing Rs 17 crore to Rs 30 crore, he pointed out.

According to him, there was no dissent over the issue in the Board of Governors’ meeting last week. The state representative, Chief Secretary, Ms Manjula Subramanium, was also present in the meeting which had the fee-hike issue on the agenda.

Asked whether the December 2007 Board meeting had agreed to increase the fee from the existing Rs 2 lakh per annum to Rs 3 lakh, he said the cost inflation and the pay panel issues came to the fore by March 2008, necessitating a further hike.

New measures

Due to the new measures, 65 per cent students would now be eligible for bank loans, as against 15 per cent. “We are negotiating with leading banks for special loan packages on favourable terms for PGP students.

“Following a Board decision of June 2007 to conduct a rigorous costing exercise, and the recommendations of a cost accountant, the Institute had announced the fee-hike, from Rs 2 lakh per annum to Rs 5.50 lakh for the first year and Rs 6 lakh for the second year.

The Board also trebled the annual family income limit from Rs 2 lakh to Rs 6 lakh for the students found eligible for financial support, in a graded, need-based financial aid scheme.

Fee exemption

Replying to a question, Prof Barua said the IIM-A would recover the full cost per student from those who can pay and, at the same time, would not unduly burden those who cannot. “Out of 260 PGP students, about 15 to 20 whose parents’ annual income was up to Rs 1 lakh, would be cent per cent exempted from paying any fees at all under the new scheme.”

Thus the new scheme charges the full costs of PGP to those who are capable of paying it, while providing assistance of about Rs.8.5 crore per annum to those who may find it difficult to meet the costs. Thus, the waiver for some students would be 100 per cent while it would be 82 per cent for those having annual family income of Rs 2 lakh. Based on the income distribution of the students who qualified for admission after CAT last year, more than 65 per cent students would benefit from the proposed fee-waiver scheme. The estimated total fee-waiver based on these data would be over Rs 7.50 crore per annum.

In addition to the tuition fee of Rs 4.50 lakh per annum, the students have to incur expenses towards books, cases, teaching material, stay, computers and library, among other things, at an estimated additional cost of Rs 1 lakh in the first year and Rs 1.50 lakh in the second year of PGP.

The Institute has budgeted Rs 1 crore for 2008-09 to provide assistance for these expenses, too, to the needy students. Thus students with family incomes up to Rs 1 lakh per annum would spend nothing for getting educated at the IIM-A, Prof Barua added.

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