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Money management

How will the IIMs’ fee hike impact the huge chunk of New India that is banking on a B-school degree? Nivriti Butalia finds out...
Hindustan Times | By Nivriti Butalia
UPDATED ON APR 05, 2008 11:32 PM IST

Twenty-five-year old Arjun Menon is a techie who will, in November 2008, take the CAT exam for the sixth time. He’s averaged a 90 percentile in the years past, but still has to notch up his performance that crucial bit to get a call from an IIM. Even so, this fun-loving employee of a Gurgaon-based US technology firm sees no reason for there to be a fuss vis-à-vis the fee hike in India’s top management institutes. “What’s the problem?” he asks, “Nobody’s going to be rejected because they don’t have the cash. Once you get in, there are tons of options to fund your MBA.”

While IIM-Bangalore has increased its fee from Rs 2.5 lakh to Rs 4 lakh for the first year and to Rs 5 lakh for the second year, its scholarship fund has also gone up from the earlier Rs 90 lakh to Rs 1.5 crore, where it will now stand. Says Pankaj Chandra, director IIM-B, “We have a very strong policy that no student is turned down due to lack of finances.” He adds that from the 20 per cent of students who were getting financial aid, “35-40 per cent will now be provided for.”

Explaining aspects the fee hike has to account for, Prof Chandra says, “We run a mini-township. Revenue from the fee is a very small fraction of revenue of the institute.” He compares the institute’s expenses to that of a household: “There are utilities like water, electricity, salaries to be paid, municipal taxes, maintenance, library budgets, and computers to upgrade. The hike will still not catch up with our overall cost.”

In contrast, the Faculty of Management Studies (FMS), University of Delhi — also government-supported like the IIMs — charges a paltry Rs 10,000 a year; Rs 9,670 from DU students, and Rs 9,970 from outstation candidates, to be precise. (The additional three hundred rupees are migration charges.)

“The fee hike is objectionable at a symbolic level,” says Professor J.K Mitra, Dean of FMS, Delhi, adding that if institutes like the IIMs can up their fees, so can private institutes. “There will now also be huge pressure on the AICTE (All India Council for Technical Education) from primarily private institutes wanting to increase their fees to such an extent as the IIMs,” he points out.

Citing a different argument, the Indian Institute of Planning and Management’s Professor Arindam Chaudhuri says, “The fee hike will cause the aura of an IIM to diminish. Given that except Bangalore, all IIMs are in places of minimum economic importance, why should a government-supported institute hike its fees? Despite bank loans, the number of students who could access a Rs 4 lakh IIM degree would be much more than those who now make it to a Rs 12 lakh one.”

It’s early to tell whether there is a definite correlation between the grandest Indian B-schools jacking up their prices, and the coaching-class industry acting accordingly, but Shiva Kumar, Director, Research and Development for the coaching institute, Career Launcher says, “Our students don’t feel disadvantaged because of the fee hike. Tripling the fee is surprising, but scholarship amounts have also been raised. But while doing our pricing, we never think of what the IIMs have raised their fees to.”

The folks at the bank say all is good. From their perspective, the fee hike makes little difference, given that the interest rate remains unchanged. Syndicate Bank’s general manager for the Delhi region, Mr Srihari Bhat says, “There is no problem sanctioning education loans (SyndVidya) to students who get through the IIMs. They will get good jobs, and not default in the payment of loans.”

Consider the recent crop of IIMs: so far, IIM-Kozhikode has been charging Rs 2 lakh per year, and correspondingly, Rs 4 lakh for the two-year PG diploma courses. The fifty per cent hike now means that the two-year course would set an IIM aspirant back by Rs 6 lakh. A source from IIM-Kohzikode refuses to be quoted, but hints at this fee hike having come only in light of the 6th Pay commission. The official explains that the hiked amount will be utilised to provide better salaries for the faculty, and in light of increased costs, will contribute to overall maintenance of (albeit government-funded) infrastructure.

The older IIMs are more expensive. Longer-established, with more employees to pay salaries to, a student at the IIM-Ahmedabad will pay more than one at the youngest IIM yet, at Indore. Vijayendra Haryal, an engineer from IIT Kharagpur, with an MBA from IIM-Ahmedabad (2006-2008 batch) does not think education at a post-grad level should be subsidised, “unless it’s for research (PhD).” Haryal says no deserving candidate is left behind for lack of finances, given the easy availability of “proper financing schemes”.

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