Better to expand existing ones

We already have 13 Indian Institutes of Management (IIM), and five more have been proposed in the Budget.

The basic debate is whether we need more capacity to train managers by expanding offering of training to a larger number of young and prospective professionals and the next question is about the form in which this capacity expansion should take place.  Considering the gap between the number of applicants for writing the entrance exam (which seems to have plateaued of late) and the seats offered by the existing IIMs, it appears that there is still a case for expanded offering, at least at the post graduate programme level. There is an increasing need for offering doctoral level programmes and increasing the research output. However, the fundamental debate is whether these objectives could be achieved only by setting up new IIMs. 

The capacity of IIMs was almost static for many years making IIM education coveted and exclusive. However, there has been a significant expansion of seats in the last few years. First expansion came because of the Supreme Court ruling on reservations for Other Backward Classes (OBCs) where it was held that the absolute number of seats for general category students had to be held while the OBCs were accommodated on a larger base. This resulted in almost doubling the capacity of the old IIMs.

In addition, six new IIMs were set up during the UPA II regime. These new institutions offered opportunities for innovation. It helped some of the new IIMs to break away from the shackles of legacy and think about their individual models afresh. IIM Udaipur for instance, has plans of focusing on two sectoral themes: Development management and tourism management in addition to the regular menu of programmes they offer. The new IIMs get an independent board and adequate autonomy and try out new systems of offering educational and training programmes. Most IIMs are also developing distinct revenue models as they continue to operate.

Diluting brand

However, there has always been a strong argument against newer IIMs. The argument is that the new institutions tend to dilute the brand of existing IIMs and spread the brand too thin. In the past, older institutions made a strong case for strengthening themselves and expanding to other geographies. IIM Ahmedabad had considered Mumbai and Hyderabad as locations for expansion; IIM Bangalore was interested in making a foray into Singapore and had a centre in Chennai; IIM Lucknow has a centre in Noida. Even the relatively new Indian School of Business decided to open a new campus in Mohali and thereby strengthen the existing systems and expanding the footprint of the brand. It was to prove that with some resources, there was opportunity to expand the offering in newer locations and still achieve the objective of offering a greater capacity. 

The arguments in favour of retaining the original branding is that it helps in better placement opportunities, brings in the rigour of an established institution, is easier to recruit faculty and helps optimising costs and resources.  As regards the Budget announcement, the government may have hurried in making the announcement. Given that six new IIMs were set up a few years ago, it would have been important to review the experiences of these IIMs before setting out to announce more.  Some of the new IIMs suffer from locational disadvantages, and may be finding it challenging to build a strong faculty base. Now that the announcement is made, thought needs to go into where these new institutions will be located. Being intellectual institutions, they do not create large number of jobs for the local population and therefore, the consideration for locating these institutes should be access to industry, trade and commerce rather than putting the institutions in isolated locations that are not easy to reach.

Similarly the resources allocated to all 11 new institutions (IITs, IIMs, four new AIIMS and an institute of Social Sciences) together has been Rs 500 crore. If we are to go by pure logic of allocation of financial resources from the budget, it would have been much better to encourage the existing institutions to have a better footprint. In the past, the finance ministers have announced liberal assistance to institutions of higher learning. From the point of view of effectiveness, at this time, it would have been much better to strengthen and stabilize the existing IIMs and allow them to grow and consolidate before announcing a new set of institutions covering some geographical and parochial interests.

(The writer is professor, Centre for Public Policy, IIM-Bangalore)

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