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Single Entrance Test / IIMs Controversy


Prof. J.D.Agarwal

Professor of Finance & Founder Chairman & Director, Indian Institute of Finance
Chief Editor, Finance India
Email: jda@iif.edu


I would like to thank my colleagues at Indian Institute of Finance, Professor Aman Agarwal, Mr. Deepak Bansal, Senior Lecturer, and Ms. Yamini Agarwal, Lecturer, for their assistance in preparation of this paper. I would like to mention that the paper is developed using vast material including World Bank Report, World Investment Report of United Nations, IMF Reports and RIS report on South Asia Development & Cooperation Reports. However, for all errors and omissions, I am solely responsible.

© J.D.Agarwal, Indian Institute of Finance

Soft copy of the paper (In PDF Format)

1. The implications of refusing to sign the MoUs with the government for reducing down the reserves of IIMs to Rs.25 crore may be a major cut in governmentís grants to IIMs who refuse to sign MoUs. All IIMs have been financed by the government with public money ever since their inception. They have been given free land and crores of rupees of funds for developing infrastructure and meeting revenue expenses besides the government patronage. The cut in the government grants to IIMs may not pose any problems for older IIMs as their need for developing infrastructure is almost zero and they can manage enough funds through their earnings to take care of their operating costs. The government, on the other hand, will save all those funds which go as grants to these IIMs and use them alternatively to set up new institutions of higher learning or divert these funds to the elementary and secondary education which should be the primary responsibility of the government to increase literacy level in the country.

2. Some of the IIMs were refusing to sign the MoUs because IIMs believe that MoUs will force them to comply with ERC guidelines, killing the staffís initiative to do research. I wonder how ERC guidelines would kill research initiative. Research is an activity which once gets imbibed one gets addicted to it and cannot leave it. A researcher derives immense pleasure from research amidst pains. If foreign travel and expenditure incurred is the measuring rod for research than the output then ERC guidelines would certainly affect research adversely.

3. When the government stops funding, IIMs can deal with the expenditure with their current earnings and also the interest earnings from about 100 crore rupees endowment fund, which each one of the older IIM has created over a period of time. Meeting expenditure will not be a problem for the IIMs as non government self financed institutions are meeting their expenditures, both capital as well as revenue through self financing. Most of the non government institutions neither enjoy government patronage nor the free land available to these non government institutions offering MBA level programs. They are required to pay hefty fee to AICTE and Department of Technical Education of their respective states for the visiting teams for inspections.The IIMs donít require to pay anything to any agency. Moreover, most of the grants from government agencies, such as, AICTE, ICSSR, DST and international agencies go to IIMs and not self financed non government institutions. If non government institutions given their infrastructure can run MBA level programs well with scant resources, why should IIMs face any problem for not being given any grant by the government.

4. Three IIMs - Lucknow, Kozikode and Indore have agreed to sign MoU with the government as they are relatively new and require large amount of funds for building up massive infrastructure. If they are contemplating older IIMs - IMA, IMB & IMC have large amount of endowment reserves with them and well established infrastructure, brand equity. I donít think the three IIMs signing MoU and other IIMs not signing MoUs would in any way result into any divide. They are autonomous bodies, each one of them is run independently except for the admission test for which a joint committee is set up. This in any way is not likely to be diluted in the present circumstances.

The sharing of library resources amongst institutions has become a common feature and are being shared not amongst IIMs but even by other institutions through a library network. Faculty amongst IIMs is hardly exchanged. Except for CAT there is no other joint programmes offered by IIMs.

5. Governments decision that all management institutes including IIMs should adhere to single entrance test instead of CAT is justifiable even if it results in cut into major resources of revenue for the IIMs. Educational institutions are not private venture organisations. Their primary objective is service to the community and imparting high quality education. They are not meant to be profiteering. They need to raise resources only to the extent they need to meet their current and futrue expenditures for building up and improving infrastructure, operating costs and contingencies irrespective of whether an educational institution is government or non government. It results into major cut in the resources of IIMs, is not important. At present young candidates aspiring to seek admission to MBA programs incur heavy costs for multiple tests, suffer from harassment and uncertainty with regard to their admission prospects. The parents of these lacs of students also suffer due to these factors. Once there is a single admission test, a student would, by and large, be clear as to where does he stand and need to appear for only a few GDs and interviews. A sense of certainty would prevail and traveling, filling of forms, appearing for multiple tests will be reduced. These students be in a position to concentrate on their third year bachelor level studies. As a result, even the atmosphere in colleges, the class attendance will improve.

6. There is a need for a single admission test. It may be a CAT or All India CAT run by either IIMs or by government itself or by any other agency under the Ministry of HRD followed by GDs and interviews. In my opinion, it is not a question of abolishing CAT or replacing CAT but widening the scope of CAT at All India level and being administered preferably by the government or by any government agency applicable to all management institutes approved or non approved along the lines of G-MAT of US. This will give credibility to Indian MBA level programs internationally. The rigor of the CAT need not be diluted either. The agency administering the All India level CAT may have representatives from IIMs, from universities, Business Schools and other management institutes and AICTE and Ministry of HRD so as to give it a wider acceptability.

In my opinion, the idea behind the MoU is to regulate the management education in the country more appropriately. The government has funded the IIMs, in any case has a given level of control. What is wrong? I donít see anything wrong in signing the MoU results in increased government control over IIMs as government is responsible to the people and the Parliament for regulating education and service to the community. In my opinion, the government has a right to have regulatory control even over those institutions which donít enjoy the government patronage or government funding. Education is a charitable activity for public good. It must be followed in that spirit. Increased government control does not seem to be a valid argument for not signing the MoU. However, some of the provisions of the MoU which may affect the academic pursuits of IIMs, if not acceptable, may be discussed by a joint committee of IIMs and IIMs can request the government to either modify or delete such provisions giving justifications.

7. Governments interference in IIMs or of any other educational institution in the country including non government self financing institutions is justifiable as it is ultimately the government who is responsible to the people of the country. It is all the more important for the government to interfere in institutions which are totally financed and patronised by it. Education is not a commercial activity. Even in case of commercial activities, the government has a right to interfere in the interest of nation. Why then IIMs or even universities be the holy cows where the inference is considered to be bad. In an academic set up interference is always subject to a given level of accountability. The educational institutions deserve to enjoy the academic autonomy within the overall regulatory control of the government. IIMs cannot and should not be an exception. In case the government is found to be interfering beyond the provisions of the law or affect the academic excellence of an institution, the academic institution must react and respond to the government for suitable corrections. It is only in a military regime or dictatorship that educational institutions need to be afraid of government interference.

8. As far as the question of the time when the government came to terms with privatising higher education is concerned, I feel that higher education has already been open to the private sector. Privatising higher education is often misunderstood treating it as if privatising education means a commercial activity. Education as such is already run both as a charitable activity by public trusts or societies or as commercial activity where the management is in the hands of a private company or an individual such as tutorial colleges etc. Trusts and societies running education institutions are entitled to the status of a ďstateĒ within the meaning of Section 12 of the Constitution, as per the various decisions of the Supreme Court in this regard, the clarifications of Ministry of Law and the provisions of the Constitution. They are also within the purview of Central Vigilance Commission. The surpluses so generated by such trusts and societies cannot be distributed amongst the trustees or the members of the society. They are, as a matter of fact, performing the role which is much more creditable than the government institutions funded by the government with public money. Therefore, non government trusts and societies engaged in education deserve to be appreciated and respected. However, they must self regulate and should have high respect for law. Of course, there is a need to regulate such trusts and societies which are in the hands of unscrupulous people who misuse the funds of such trusts and societies. It is unfortunate that the trusts and societies engaged in imparting education purely with philanthropic purpose and a mission, strengthening India and imparting quality education are denigrated by some particularly in the government or working in universities and government funded institutions. It is the activity the philanthropist, the quality of service, the dedication and commitment, a sense of patriotism being cultivated which should be hallmark of any educational institution be they government or non-government.

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©1987-2004 Copyrights Indian Institute of Finance

Prof. J. D. Agarwal

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