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Part - III

My distinct feeling that the IIMs have not engaged good legal brains. Perhaps Sri Vindi Banga and Sri Narayana Murthy can spare some of their high-powered legal talent to draft an appeal or PIL leading to a landmark judgment.

Market Pricing

The question arises: Are the IIMs and other institutions right to charge a "High Fee"? Is it against public interest that high fees may possibly reduce chances of pursuing such education by the students coming from weaker economic strata in the society?

There are 2 answers to this question: -

1. Loans
   All banks give highly affordable low cost loans to IIM students (and most other professional courses) The loan up to Rs 4.00 lacs is granted at 4% interest, one year grace after graduation and repayable in up to 7 years. For most IIM grads, the starting salary is such that the entire loan can be repaid in the very first year. Hence the IIMs declare rightly that no student who is selected is prevented from attending the IIM on account of lack of resources.

2. It is not charity!
   The Supreme Court in the landmark full bench judgment of October 31, 2002 in the case of TMA Pai and Ors Vs State of Karnataka has remarked that, "The acquisition of an academic degree is a 'private good' for private benefit and not a 'public Good' for the benefit of society at large." The Hon. Judges have used the definitions of 'private good' and 'public good' from Economic theory purposefully to support the case of private self-financing educational institutions. However, the same idea logically leads to the argument that the business of the IIMs is the delivery of an academic degree which is a private good, and thus commerce and not an act in the service of society at large. This throws out the Hon. Minister's statement 'Loans have no role, it is not business, not in this country' as reported in the press. In fact this support from the SC alone is enough to win the case for IIMs!

The Right to Manage

The SC in its landmark judgment recently has upheld the 'right to manage'. According to me, the 'right to manage' includes the right to hire and fire, admit or decide not to admit any student, fix fees and other charges, fix and pay salaries, punish bad conduct and reward good performance, and generally conduct the affairs of the Institute in a manner designed to further the objectives of the organization, irrespective of other considerations except those of 'Fairness' and 'Integrity' in all affairs.

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* Contributed by: -
Prof. P. V. Ramana; BE (Hons) Elec. Engg. from Andhra University, Waltair, India; MBA (Accounting & Finance) from Washington State University, USA; Prof. Engr. (Thermal Power), USA (equiv. to a Doctoral qualification); Receiver of Life Time Achievement award in 2003 for service to Management Education given by World HRD Congress, Boston, USA; Dr. P. N. Singh Foundation has instituted the "Prof. P. V. Ramana" for Corporate Governance; he has also founded ITM in 1991.