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Expansion of IIMs

its student intake substantially within all available resources offered by its flagship programme, i e, the postgraduate programme in management. A broadly similar solution for other IIMs could be worked out, as all share a similarity in programmes offered, in ethos and culture; any differences that exist would be in the details.

Expansion of IIMs

Myths, Realities and Policy Choices

This article suggests a roadmap for IIM Ahmedabad to increase its student intake substantially within all available resources offered by its flagship programme, i e, the postgraduate programme in management. A broadly similar solution for other IIMs could be worked out, as all share a similarity in programmes offered, in ethos and culture; any differences that exist would be

in the details.


he postgraduate programme in management is the flagship programme offered by the Indian Institutes of Management (IIMs). Without this programme, the Post-Graduate Diploma in Management (PGDM), probably the brand would not exist. Two IIMs (IIM, Ahmedabad and IIM, Calcutta) offered their first Postgraduate Programme in Management (PGP) programme in 1964 with practically no faculty and infrastructure. Initially, Harvard and Massachusetts Institute of Technology (MIT) provided faculty resources on a limited basis and plans were made to recruit competent research staff to train them to become faculty in a few years. Most of the early faculty was from this lot. By the mid-1970s the two IIMs were fully established. Then came IIM, Bangalore (in the 1970s), Lucknow (in the 1980s), and Indore and Kozhikode (in the late 1990s).

In the mid 1970s IIMA had three sections for the PGDM programme with a total intake of about 220 students each year consisting of 180 PGP students and others joining the Fellow Programme in Management (FPM) and Specialisation Programme in Agriculture (SPA). Later on, a nondegree Faculty Development Programme (FDP) was started in 1981 to help educate faculty for university departments.

Since these developments, practically no major expansion took place till 2001. During this period a notable feat was to build the corpus (in 1990s) from matching grants from government and the high interest earned on them. There were concerns about promoting exchanges between students in the agricultural programme with the general PGP batches. The SPA was separated from PGP and rechristened PGP-ABM with 30 students in a new section. However, there was no overall increase in the student intake.

However, this experiment did not last long. With continuous government pressure to increase student intake another 60-65 students were admitted from 2003 onwards. The earlier decision to have separate first year classes for the agricultural stream was reversed and a common pool of students was distributed among four sections in the first year. This resulted in an increase in class size from 65 to 80. Effectively from the teaching point of view there has been no increase in the first year. However, some additional courses were required in the second year, but an increasing number of students started going abroad for the fifth term and this resulted in the overall teaching load probably remaining the same.

To summarise, IIMA admits 300 students (250 PGP + 30 SPA + 15 FPM + some repeats) in the first year. Thus, the effective increase has been only 60-65 students in PGP over a period of 30 years. However, the duration of FDP was reduced from nine months to four months and the FPM remained neglected with decreasing intake and practically no intake

Economic and Political Weekly July 8-15, 2006 in critical areas like finance and marketing for many years. Most FPM students now admitted are in centres like the Public Systems Group – a clear departure from the original objective of increasing the future supply of hard core business faculty.

Defining PrioritiesDefining PrioritiesDefining PrioritiesDefining PrioritiesDefining Priorities

IIMs were set up to promote managerial education in India. This they did for a long time. However, in recent years the priorities have changed. A significant event occurred when the previous National Democratic Alliance (NDA) government advocated a reduction in fee. Alumni and media were helpful and acted as “white knights” to protect the IIMs’ autonomy. With the change in the central government in May 2004, the IIMs perhaps enjoy a greater degree of autonomy today. However, faculty governance has received a jolt. The increasing domination of the alumni on the IIMA board has pushed the institute into the “business of education” rather than the “education of business”. The faculty has been reduced to mere employees with little control over new programmes and academic alliances. Media reports are now the major sources of information to know the latest business ventures approved by the board. Whenever there is a public debate about issues concerning the future of IIMs (for example, setting up a campus abroad or OBC reservation) select alumni act as spokespersons for the IIMs and not the faculty who should know best about the academic implications. Alumni do provide media sound bytes to build the brand; however their contribution in finances or academic (facilitating case writing, etc.) has been almost nil. The alumni’s contribution to IIMA’s corpus has been less than Rs 2 crore since inception.

Brand IIMBrand IIMBrand IIMBrand IIMBrand IIM

Since the fee cut fiasco, the IIM brand has increasingly become a barometer to measure any policy decision and rightly so. However, to evaluate its usefulness, certain critical questions need to be asked,

  • (a) How does brand value get defined?
  • (b) Who created and nurtured the brand?
  • (c) Who are the beneficiaries and are they the target group?
  • (a) In recent years students’ placement abroad on international salaries has been increasingly defining the IIM brand value. About 20 per cent of graduating students are being hired by banking firms based in the US and UK. Jobs generally involve financial engineering (involving complex
  • maths probably learnt in the IITs and financial jargon learnt at IIMs). Continuous media coverage after the fee cut fiasco and having at the helm an icon like the Infosys chief mentor, N R Narayana Murthy and other well placed domestic alumni also helped a great deal in building the IIM brand. Unquestionably, placement is an important measure for world wide recognition, but in everything else IIMs seem to have no international standing.

    (b) The IIM, Ahmedabad, till recently was getting grants and subsidies from the government for day-to-day functioning. For example, IIMA was allotted 100 acres ofland (current market value approximately Rs 2,000 crore) and received generous financial support for 40 years till 2002. Now it is able to function without government subsidy. The contributing factors are: yearly increase in tuition fee unlike in the past; enhanced consulting opportunities because of general explosion in training needs of industry; and interest income on the corpus made up of savings and government’s matching grants. An important fact to note is that alumni contribution has been less than Rs 2 crore in all these years.

    The corpus of most of the reputed business schools in the US comes from the alumni and not from government except land grants. Most of the top business schools in the US are part of the university system and land available to them is much less than what the government has provided to IIMs. Still business schools in the US ensure that at least 800 students graduate each year compared to only 300 from the IIMA. One wonders why IIMs can’t do so.

    (c) Who are the beneficiaries of the IIM brand value? It is difficult to make an exhaustive list of beneficiaries of IIMs brand. However, there are some direct beneficiaries who can easily be identified while others are a matter of conjecture and dependent on one’s biases and/or beliefs.

    The direct beneficiaries are:

  • The limited number of students who migrate and get hefty salaries in Wall Street. Retrospectively students resist the increase in numbers because it would dilute their job prospects since supply would increase for limited foreign jobs.
  • Faculty (including director) who can earn close to Rs 30 lakh plus liberal perks mainly through consulting and prestigious board memberships.
  • PGPX participants who are largely NRIs and probably would go back to make more money. Education with the PGP brand value and best living facilities is the cheapest in the world.
  • Some alumni who benefit by using it to leverage for professional networking and social positions. They also want to make sure that membership to this club is restricted to avoid dilution in membership value by increasing number or compromise on its elite image.
  • If facilities and brand value are built over a period of time using public money, one needs to ask: What is the value of benefits derived from this brand by Indian society who has contributed heavily? Brand

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    Globalization and Regional Economic Cooperation:Globalization and Regional Economic Cooperation:Globalization and Regional Economic Cooperation:Globalization and Regional Economic Cooperation:Globalization and Regional Economic Cooperation:
    Management ChallengesManagement ChallengesManagement ChallengesManagement ChallengesManagement Challenges

    Department of Business Management, University of Calcutta

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    The Department of Business Management, University of Calcutta will organize a conference on the above theme during

    November 25-26, 2006November 25-26, 2006November 25-26, 2006November 25-26, 2006November 25-26, 2006
    in Kolkata, India to celebrate the completion of 150 years of the University. Academics, Researchers and others interested in contemporary regional and multilateral trade issues are encouraged to submit papers for presentation for the conference. The submission deadline is
    August 16, 2006August 16, 2006August 16, 2006August 16, 2006August 16, 2006
    . Papers will be referred to the Scientific Committee and the decision regarding acceptance will be notified by September 30, 2006. Please submit papers to:

    N. Sen/R. Bhattacharyya, Department of Business Management, Calcutta University, Alipore Campus, 1 Reformatory Street, Kolkata 700027, India, email:
    Submission by email is encouraged. For more details see:

    Economic and Political Weekly July 8-15, 2006

    value for whom? The iconic status of highly placed students abroad can inspire a few but this can also frustrate many for their failure to achieve a similar goal as they were not born with the advantage of having the right connections and background. And this does happen to many IIM graduates who are at the lower end of salary range (almost 1/10th of their classmates).

    “Should society allow a select elite group to appropriate all the gains accruing from facilities (or brand) built over decades using large sums of taxpayer’s money or insist on being more inclusive?” The issue here is increase in total intake at IIMs and not the reservation (whom and how to admit). Reservation is a social justice issue.

    If advantages accrue to a select few, why not have more ISBs? The International School of Business (ISB) in Hyderabad was given land by the government but its own finances just like the best business schools in the US managed it. The ISB has increased its intake to 400 in five years while IIMs even after four decades of existence are finding it hard to go beyond 250 in each IIM.

    Decline in QualityDecline in QualityDecline in QualityDecline in QualityDecline in Quality

    Quality is a matter of perception and depends on the parameters one uses to measure it. Parameters could be those which are acceptable to (or valued by) Wall Street recruiters or the ones which would be acceptable for managing the best Indian companies. International recruitment is mostly in areas such as finance, investment banking, and consulting. It requires knowledge of high maths for jobs requiring financial engineering. Increasingly, training at IIMs is at variance with what is required by domestic companies except for a few. If technical subjects can be supplemented with liberal arts subjects, IIM graduates would make better managers and social leaders.

    If IIMs compromise a little bit on English (particularly language devoid of western cultural influences) and knowledge of complex mathematical modelling, a large number of students should be available for admission. This would also satisfy the parameters of quality which most domestic companies may require.

    The ancillary industry (coaching for CAT) that has thus developed need not be larger than the main industry (IIMs).

    Students with LowerStudents with LowerStudents with LowerStudents with LowerStudents with Lower
    Cut-off PointsCut-off PointsCut-off PointsCut-off PointsCut-off Points

    In more recent years the design of admission tests has changed. The emphasis is more on an understanding of a higher level of maths and English language to meet the needs of foreign recruiters. This also presumably enhances the IIMs brand value.

    To admit underprivileged students and also for general category admission in PGP-ABM (agriculture) and FPM, CAT cut-off points have been lowered for them. Without any extra help, they compete with students with a higher cut-off. Since, teaching methods and evaluation methods are similar to both classes of students the deficiency not only continues but further gets accentuated.

    For evaluation, grades are assigned on a relative grading basis and not based on absolute marks. Relative grading requires fitting a kind of normal curve and students at lower end (about 10-15 per cent) invariably get awarded a D or F. Generally these are the same students who were admitted with lower cut-off points. At the end of the year, when comprehensive evaluation is done, some of them are asked to repeat/ or leave the programme. Inferences are drawn that forcing the institute to accept underprivileged candidates would lower the institute’s standards.

    If the evaluation criteria were changed to absolute grading in which if a student receives, for example, 80 per cent of the maximum possible marks he is considered having satisfactorily completed the course, many students would be off the critical list. Here we do not have to compromise on content and level of coverage.

    Finally, IIMs believe in the “pressure cooker” approach to teaching. Eight to nine courses are taught in an 11-week term with quizzes, assignments, and exams everyday. Probably this has more to do with building mental stamina and learning to take the stresses and strains in the corporate world rather than learning management concepts and skills.

    This results in limited understanding and

    Table: Students’ Intake and Faculty ResourceTable: Students’ Intake and Faculty ResourceTable: Students’ Intake and Faculty ResourceTable: Students’ Intake and Faculty ResourceTable: Students’ Intake and Faculty Resource

    Programme Year of the Number of Students Units Taught Equivalent Programme Full Time Faculty

    PGP First year 300 4 sections*20 unit each = 80 27 PGP Second year 250 60 20 PGP-ABM Second year 30 15 5 FPM (PhD) Second year 15 44 courses each 1.5 units = 66 22 PGPX One-year programme 61 600 sessions /20 per unit =30 10

    internalisation of the subject matter. One wonders how valuable this approach is.

    Available Resource UtilisationAvailable Resource UtilisationAvailable Resource UtilisationAvailable Resource UtilisationAvailable Resource Utilisation

    Expansion requires adequate faculty and physical infrastructure. The IIMA currently has about 84 faculty members. In a year each faculty is required to do equivalent of six units of work. Of these, three units are meant for classroom teaching (one unit is equivalent of 25 sessions of 70 minutes) and three units are for research, consulting and administrative work.

    IIMA offers PGP, PGPX, PGP-ABM (agriculture) and FPM as degree programmes. In addition, the Faculty Development Programme and some non-consulting management development programmes are also offered every year. A faculty can teach the required 75 sessions (equivalent to three units) in any of these programmes. Faculty members get salaries and allowances as per UGC norms. For excess teaching additional Rs 4,000 per session is paid. In addition, faculty also teaches in incompany programmes on consulting basis. Current rates vary from Rs 20,000-30,000 per session. An initial consulting income of Rs 6,00,000 earned during a year is exempt from sharing. Any excess amount earned is shared with the institute on a

    50:50 basis. On the sharing basis, the maximum consulting allowed is Rs 40 lakh per year.

    The accompanying table is a gross estimate of students’ intake and faculty resource used in different degree programmes. For FDP and non-consulting MDPs it is difficult to estimate the number of sessions taught since it varies from year to year.

    The following points need to be noted:

  • (i) The FPM (PhD) intake is about 15 students of which only 6-8 students graduate every year. Others leave or are asked to quit for unsatisfactory performance. However, to teach only the second year FPM courses 22 equivalent faculty resources are used. This is a gross underutilisation of scarce faculty resources.
  • (ii) PGPX is a new programme having 61 participants. These are mostly Indians who have worked abroad as software engineers for about 4-5 years and want to do MBA to enhance their market opportunities. In a bid to internationalise the programmes, IIMA decided to offer PGPX (a one-year executive MBA programme). For this programme, GMAT score (considered easier than CAT) is used for admission. The competition for admission is much less as there are about 1,200 applicants for 60 seats in PGPX compared to 1.5 lakh applicants
  • Economic and Political Weekly July 8-15, 2006 for 250 seats in PGP. IIMA offers the cheapest programme in the world with top class facilities and a fully paid five-week international sojourn.

    IIMA charges an all inclusive fee of Rs 8 lakh for the programme. This includes tuition fees, five weeks of fully-paid international immersion programme, lodging and boarding, computer and library usage fee, teaching materials, placement fee, etc. A rough estimate suggests that this is a highly subsidised programme costing the institute about Rs 2 crore (roughly Rs 2.5 to 3 lakh per participant) just to recover direct costs.

    Recommendations for Better Utilisation

  • (i) FPM programme – two possible alternatives:
  • (a) Increase intake of FPM fourfold (about 60 each year) so that faculty time spent in second year teaching can be effectively utilised. This would also ensure supply of faculty for management education in India. FPM programme was intended to produce enough teachers for expanding management education in India, but somehow this did not happen.
  • (b) Have one general stream called “FPM in Management” and allow functional area specialisation at the dissertation level. Most of the universities with faculty constraints and/or limited student intake follow this route. This would save about 15 faculty teaching units enough to start a new section of PGP.
  • (ii) Review expansion of PGPX: IIMs would need to clearly define its priorities. With limited faculty resources one would need to make choice between following alternatives:
  • (a) Use IIMs infrastructure to serve local needs and aspirations by increasing intake in PGP, or,
  • (b) Use its resources to train people who were making close to $ 100,000 a year; offer them a subsidised programme and create opportunities for them to go abroad again for higher salaries. PGPX is a heavily subsidised programme and does not add much international value, except four weeks of international immersion.
  • With limited faculty resource, IIMA can’t have both. Choices have to be clearly stated and practised.

    (iii) So far discussion about faculty resources has been limited to an aggregate level. A greater problem is the mismatch of faculty recruitment and faculty required to teach highly demanded courses in finance and marketing areas. Limited faculty available in deficit areas end up teaching more in degree programmes compared to the faculty in surplus areas. Further, by sheer number alone, in other areas faculty tend to dominate the decisionmaking process at the institute. They also have greater freedom to plan their time and end up earning a substantial amount in consulting income. The faculties in deficit areas naturally being critical about inequity in the system also become “unfavoured” with the administration resulting in further alienation. The recent monetisation of internal teaching has not helped much as the reward of an extra session is only Rs 4,000 compared to Rs 20,000 per session in consulting teaching. Therefore, there remains a chronic shortage of courses in finance and marketing.

    To strengthen the deficit areas, recruitment and reward system need to be thoroughly reviewed. This is possible if total emoluments and recognition are commensurate with market demand and supply in each functional area. In the best business schools of the world, a fresh PhD in finance gets twice the salary than other areas. Here it is the other way around. Faculty in deficit areas are forced to teach compulsory courses while surplus faculty enjoy higher consulting income/foreign trips.

    Physical InfrastructurePhysical InfrastructurePhysical InfrastructurePhysical InfrastructurePhysical Infrastructure

    Presently IIMA has 26 dorms with a capacity to accommodate 690 students. It is likely to have 80 fully furnished air conditioned apartments by March 2007. Besides there is KLMDC with 62 double rooms and the new international MDC with more than 100 rooms for residential purposes. There are 13 large class rooms (each can seat 85 students) and dozens of syndicate rooms for smaller classes.

    Presently only 24 dorms are occupied, two dorms (with 60 student capacity) are kept to accommodate visitors for cultural and other academic public events like ‘chaos’ and ‘confluence’ and other uses at the discretion of the chief administrative officer.

    Of 80 planned apartments by June 2007, 27 have been and occupied by PGPX married participants. Fully air conditioned apartments are so big that some participants even house their maid servants to take care of their children while living on campus. A rare treat for PGPX participants that only IIMs can provide.

    Once priorities are clear and IIMs do decide to increase PGP intake, solutions are obvious. If two students are put in each apartment (a very common practice abroad) and two dorms with 60 rooms are made available for residential purposes, 150 new PGP students can be accommodated. For short duration programme of less than one year, the institute need not provide married accommodation.

    To sum up, IIMA can increase its PGP intake substantially by (i) better utilisation of physical infrastructure; (ii) better faculty time management by restructuring programmes and active faculty recruitment in deficit areas; and (iii) by defining its priorities more sharply. The IIMs PGP product is its best brand and it would be wise not to dilute it by allowing remotely related activities a “free ride” on it.



    [Views expressed are personal.]


    1 Disclaimer: All these data (faculty and infrastructure) are based on publicly available information. Institute administration does not make comprehensive data available to faculty or any other group. Possible estimation error could be 5-8 per cent on either side.


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    Economic and Political Weekly July 8-15, 2006

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