Feb. 5: On the last day of the 13th Lok Sabha, Murli Manohar Joshi’s ministry slashed the annual fees of the Indian institutes of management in a move that threatens to make the country’s premier B-schools dependent on government dole for survival.
The axe that has been dangling over the IIMs for six months dropped today with the human resource development ministry announcing a downward revision of fees from around Rs 1.5 lakh to Rs 30,000, excluding mess charges.
“The present fees charged by the IIMs to the tune of Rs 1.5 lakh is exorbitant, particularly in view of the fact that these are fully government-funded technical education institutes,” the order said. The revised fee structure, based on the government-appointed U.R. Rao Committee recommendations, will be effective from the 2004-2005 session.
IIM officials expressed displeasure over making public the order without informing the institutes. “We didn’t receive the circular during the office hours and got to know about it from the media. We can’t comment before seeing the order,” an IIM director said when contacted by The Telegraph late this evening.
With the ministry issuing the order, the IIMs can do little about it. “Though the formal procedure requires the respective boards to pass the order before implementing the slash, none of the institutes will dare defy Delhi,” said an IIM source.
According to estimates given by the IIMs, fees constitute about 50 per cent of their income. “The decision will result in an annual shortfall of around Rs 4-6 crore for the big three IIMs. We will have to bridge the gap by spending from the reserves, which will be depleted in the next five to six years and we will be completely dependent on the government,” said a faculty member.
IIMs in Ahmedabad, Bangalore and Calcutta have a reserve fund of around Rs 80-100 crore. Joshi wants the institutes to cap this at Rs 25 crore. The “sustenance” of the three new IIMs, Lucknow, Kozhikode and Indore, that do not have any reserve funds will be difficult, sources said.
At a meeting with Joshi last Saturday, the six IIM directors stressed these points and requested him not to tamper with the fee structure. They, however, agreed to increase the number of students, another key demand of the minister.
An estimate of the institutes’ spending on each student — around Rs 2.9 lakh for the two-year programme — worked out by IIM Ahmedabad was also placed before the minister. Joshi, however, refused to discuss the expenses and said it was the government’s, not the institutes’, concern.
But the slash in fees two days after Jaswant Singh’s interim budget reduced allocation to IIMs from Rs 74 crore to Rs 45 crore has cast doubts on Joshi’s ability to provide funds.
“The government is ready to bridge the deficit caused by the reduced fee structure,” said a ministry official, adding that the Centre will have to spend approximately Rs 15 crore a year.
If Joshi does put more money into the IIMs, it will be at the expense of primary education. But his government’s stated objective was to reduce subsidy on higher education and route funds to primary education. “Sarva Siksha Abhiyan — the government’s main programme for universalisation of elementary education — is starved of funds,” an educationist said.