IIMs scramble to get finances right

The premier Indian Institutes of Management (IIMs) will have to draw on all their management skills to solve the current financial imbroglio they are in.

On the one hand, the fee hike by IIM Ahmedabad and IIM Bangalore has caused heartburn not only among students and the Union Human Resource Development Ministry but also among the other IIMs who say they were not consulted despite an existing agreement to do so. IIM-A and IIM-B have said that a fee hike is a prerogative of their own governing boards.

On the other hand, the already-depleting corpus of these IIMs is expected to take a further hit once the Sixth Pay Commission recommendations are implemented.

While it will drain their resources, observers said the pay hikes will not be good enough to attract talent. Salaries on offer will still remain way below what a faculty member of any internationally-acclaimed university gets. Last, but not the least, all IIMs need to keep large sums of money aside to implement the 27 per cent reservation for Other Backward Castes.

It is estimated that an IIM, with around 800 students, generates Rs 40-50 crore through fees and consultancy services. This, IIM insiders said, is not enough to cover the costs.

The fee hike by the two IIMs aims to bring the expenses at par with the course fee. So, IIM-A hiked its fee from Rs 4 lakh to Rs 11.5 lakh and IIM-B raised its fees from Rs 5 lakh to Rs 8 lakh for the two-year post-graduate management programme.

IIM-B said that by increasing the fee, it was just bringing down the rate of subsidy on its management programme from 80 per cent to about 50 per cent.

“We have to pay our faculty members and administrative staff; provide for the wage bill, food bill, study tours, material costs, mess charges, campus maintenance, electricity and water expenses; and maintain the over 100-odd houses on the campus,” said a source.

IIM Shillong too is thinking of raising its fees, even as it sets to become operational this July.

The Centre does provide maintenance and infrastructure grants to the IIMs. However, an IIM review committee headed by Verghese Kurien had recommended in the late-1990s that these institutes of higher learning must be given more autonomy and must develop financial independence.

Subsequently, the three IIMs at Ahmedabad, Bangalore and Kolkata decided not to avail of any grants from the government and create their own corpus.

But not much of that remains. IIM Ahmedabad Director Samir Barua said: “Out of the corpus of Rs 130 crore that we had till 2006, only a little more than Rs 40 crore is intact. We are now looking at ways to build the corpus.”