Money management: Is IIM fee hike justified?

FEE FOR ALL: Experts are not convinced that recovering costs or inflation have pushed up the fees.

          

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The Indian Institutes of Management (IIMs) have decided to hike their fees starting this academic year. The hike announced by IIM-A has been the highest from Rs 4 lakh to Rs 11.5 lakh for its two-year post-graduate programme in management. However, its governing body Chairman Vijaypat Singhania met Union Human Resource Development (HRD) Minister Arjun Singh on Wednesday and assured him that poor students will not suffer due to the hike.

The Minister also said that there was no question of intervening in the fee hike announced by the IIMs. Soon after the IIMs, the IITs have also proposed to increase their fees.

However, experts are not convinced that recovering costs or inflation have pushed up the fees. So is there something more to this than meets the eye?

This was the topic of debate on CNN-IBN show Face the Nation: Are the IIMs and IITs justified in hiking their fees?

The panel consisted of former director of IIT-Madras PV Indiresan, Editor of JAM Magazine and an IIM Alumnus Rashmi Bansal, Director of Centre for Forecasting and Research Premchand Palety.

Taking a hike

Those who support the hike argue that IIMs are facing a shortage of faculty and in order to get new teachers and retain existing ones, they will have to be given attractive fiscal incentives. Sixth Pay Commission recommendations for salaries have to be kept in mind and an IIM study shows that the cost per student is Rs 3.8 lakh per year as opposed to the Rs 2 lakh per year fees.

However, those who oppose the hike say that three-fold hike may affect access to economically weaker students. They also suggest that a gradual and graded increase will be better. Between 2002 and 2007, the institute raised its fees from Rs 1.58 lakh to Rs 2 lakh.

So, is this latest hike especially the quantum, justified?

“Firstly, I would like to assure all the students and parents that this fee hike will not affect any of you or your dreams of attending IIM-A. We have always catered to every section of society and the moment you get admission in the institute on the basis of merit, you are going to be eligible to a need-based scholarship for families with income of Rs 6 lakh per annum,” Rashmi said.

However, if there is enough buoyancy with money and revenue then why is the fee structure changing?

Defending the IIM stance of hiking the fees, Rashmi explained, “We have ambitious plans of being among the top 10 business schools or management institutes in the world and to do this, we need to enhance the programme we are running and to enhance the facility and the research that we do, we need money."

“I would like to point out that the IIM-A students who graduated this year got an average salary of Rs 17.5 lakh per annum. Hence we see no reason that we should ask the Indian taxpayer to subsidise those of us who are lucky and privileged enough to enter such an institute and get these kinds of salaries,” she added.

"So whatever fee hike is proposed, the students will be asked to repay the loan when they graduate. I don’t see any kind of burden," Rashmi explained.