New Delhi: The Indian Institutes of Management (IIMs) are likely to get full freedom to decide their fees.

The draft rules finalised by the human resource development ministry on the advice of the Prime Minister's Office last week propose to leave it to the individual business schools to decide how much each wants to charge from students.

The first draft had a provision that the IIMs would have to charge fees commensurate with the expenditure on each student. This meant the IIMs were restrained from raising fees beyond what they spend on each student in terms of salary of teachers and staff and maintenance expenses.

Several IIM directors had opposed the idea. The PMO had also stepped in and wanted the rules to be modified. A meeting was held under the chairmanship of HRD minister Prakash Javadekar last week.

"The IIMs will get full freedom to decide their fees. There cannot be any curbs on them. The IIM Act also gives them that freedom," a top HRD ministry official said.

Sub-section 7(i) of the IIM Act empowers the B-schools to determine, specify and receive payment of fees and other charges as the institutes may deem fit. Sub-section 7(g) allows the IIMs "to lower the cost of education and to enhance the reach of education by use of information and communication technology and other innovative methods".

According to the law, the board of governors of each IIM will decide the fees. The board has the IIM chairperson, director, four eminent persons from industry, social service and academia, five representatives of the alumni and the IIM Society, two representatives of the faculty, one representative each of the Centre and the state government where the institute is located.

An IIM Ahmedabad teacher feared that the newly set up B-schools might be at a disadvantage in the race for fee revision.

"The older IIMs have earned a reputation. They will revise fees to raise the operational cost and also make money to have the best infrastructure. The new IIMs will be in a dilemma whether they can revise the fees frequently," the teacher said.

There are 20 IIMs in the country. The IIMs in Calcutta, Ahmedabad and Bangalore are regarded as elite schools while those in Sambalpur, Sirmour, Jammu, Gaya and Visakhapatnam are only two years old.

The IIMs currently charge between Rs 10 lakh and Rs 20 lakh for two-year postgraduation courses.

Former IIM Calcutta director Shekhar Chaudhury welcomed the plan for full freedom.

"The new IIMs will fix their fees in keeping with what they think is adequate. Needy students will get education loans and scholarships. They can pay back when employed," Chaudhury said.

Under the new draft rules, the IIMs will be asked to submit a vision document and a strategic plan to the government.

Another provision in the proposed rules is to enhance the age of retirement of IIM directors from 65 years to 70 years like in IITs. The rules suggest 74 years as the retirement age for chairpersons.