Policy Wise

A Quick Reality Check

Reality check has criticized the decision of the Indian Institute of Management (A) to raise its tuitions. He calls it an ”outrageous move” and goes as far as to suggest that IIMs should actually decrease their tuition to ”make quality management education accessible to Indians”. This argument has little merit.

First, despite the increase, IIMs are merely recovering the amount they spend on each student. In light of the sixth pay commission recommendations, and in order to compete with other management schools, they need more resources. Inflation has impacted the price of almost every good–why should education be exempt from it?

Reality Check further argues that IIM have repudiated their original agenda–after all, they are ”government aided institution in a developing country.” But that is precisely why this increase is justified. Why should the taxpayer, in a poor developing country, where millions have no access to primary education, fund the expensive education of a few hundred? That they are government owned is immaterial; the correct response in that case would be to free them from stifling government control and force them to generate their own resources. Their dependence on the government funding has only meant constant political interference.

If the argument is that IIMs are benefiting from the non-competitive nature of management education, then the government should be asked to permit entry of more players–especially foreign universities. Let the students decide if IIMs fees are appropriate or not; if they feel the value of education is not worth the cost, the students will choose institutions which offer better value for money. It would illustrative to remember that there has been absolutely no protest in any of the IIMs–perhaps, the students realize that they will recover their investment in a few months.

Admittedly, the question of affordability for students belonging to the poorer sections of the society is an important one. The IIMs have responded to such concerns by increasing the money available for financial aid twenty times and increasing the eligibility criterion for aid from Rs 2L to 6 Lakh. Reality check believes that it is not enough and every student should be guaranteed financial aid with nominal interest rates. Sure, the procedures may require simplification and in case of poor students, the government may guarantee the loans. However, it is not quite clear as to what obligation does the tax payer have of funding the interest bill of IIM students and that too without any means testing at all. An offhand chance that deserving students may be denied financial aid due to extraneous considerations or students may feel ‘’streesed” by the process can not be a justification for a free lunch.

Reality Check has been a tireless critic of government’s reservation policies. Yet, he fails to understand that such political maneuvering would only stop if the government interference in higher education was minimized. Yet, he thinks that the state should actually fund management education! As this blogger has written on the prevailing confusion within middle class India,

The answer strangely enough is paradoxical. At one level, the middle class is deeply suspicious of the government and yet it thinks by closing its eyes, it can eclipse the all pervasive influence of the state. On the other hand, it stills craves for state largesses unable to cut the Gordian knot which ties it to the government.[link]