View Point

The Changing Scenario of Management Education in India
Prof. C. S. Venkataratnam, Member, FICCI Higher Education Committee & Director, IMI, New Delhi
Ms Shobha Mishra,
Joint Director & Team Leader, Education & Health Services Division, FICCI
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(Article by Md Khalid Pervez, Editor, Just Careers Magazine)

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AspirationsThere has been a lot of debate on what is best for MBA education. Government and private bodies are discussing the issue threadbare, and from these discussions have come out many revelations which we must pay attention to. Their is a consensus among different stakeholders on many issues, one among them is that we must increase investment, private or government, to make MBA education more accessible so as to bridge the gap between supply and demand. However, MBA education has evolved in the midst of all this debate, regulation and freedom. Among many evolutions one is the trend where famous B schools are providing MBA from a UGC recognised university and a PGP awarded by their own institutions. How good is this system, what benefits does it has for the students, and is this trend catching up? KHALID PERWEZ explores:

Education plays a very important role in steering an economy towards a path of growth. Of all the professional courses MBA is far better placed in this respect. It has an edge over the others because it increases the overall employability of the students through intensive classroom study and practical training. This earns MBA more recognition and respect in the corporate world. Therefore, there is strong desire in the students to acquire this most sought-after degree. But our education system is far from perfect and allows vested interest to try and exploit the situation. Most often students are left high and dry as they fall into traps and snares of multifarious nature. In view of all this, there is a need to streamline MBA education system and make it more student and industry friendly. The government has guidelines which, as many say, fly in the face of reality. In such a situation what is the best way forward that can meet the expectation of all stakeholders.

Today India is the second fastest growing economy in the world after China. Until the onset of financial meltdown it was growing for the last many years at the rate of over 8%. Slowdown has severely affected all major economies but India is one the very few nations on whom the impact has been less than severe. Despite meltdown India will be growing at over 6% this year. What has provided India this cutting edge? Many say that among many reasons one is education. Education is an investment for development. India has over the years developed an infrastructure of higher education, particularly during 60s, 70s and 80s when its expenditure on higher education was high, which produced manpower needed to engine its growth, and today this gives India its most competitive advantage. However, apart from the government, no less was the contribution of private institutions like NIIT, private technical and professional colleges in creating a technical and professional workforce. Today India boasts of having a large pool of young educated workforce. And the world acknowledges this asset of India which earns its men and industry lots of benefits. Businesses from all over the world have come pouring and its men have gone places.

As nations progress, changes come in. They affect all, and require systems and people to catch up. This change is vital for sustainability. India also needs this in its entire sphere. . So are we keeping pace with the change? Are we progressing forward? Well the reports of the bodies like National Knowledge Commission (NKC) FICCI, NASSCOM, McKensey, etc, say we are not. The change in economy demands a change in the way we have been looking at and dealing with higher education so far. This is not to suggest that system as a whole is faulty. No, but the system needs correction given the current chaos and confusion which is being exploited by the vested interest. Montek Singh Ahluwali, Deputy Chairman Planning Commission had said last year, “Unlike for the economic reforms, there isn’t yet a constituency for education reforms. Worse, in the field of education, there isn’t yet a consensus among academia and students alike on most of the things required to be done for reform. To that extent, education is really in a pre-reform environment”. The situation prevailing in our system responsible for providing higher education is far from perfect and out of sync with the growing demand. It is afflicted with many ills at present. It needs fresh oxygen to make it healthy and fall in sync with the reality. With the expansion of our economy we need to evolve our education system which is more in line with this expansion because a growing economy demands more diversified, qualified workforce. We do have world class government institutions but their intake is limited fulfilling a fraction of industry demand as it can accommodate only a small percentage of students who want to pursue their most cherished dream of doing , say, MBA from elite, good quality institutions. Industry requires more good quality men or else it will not function. But IIMs alone cannot fill all. Today India has a unique demographic advantage. It has the largest youngest population in the world. Today’s India is “Youngistan” which is raring to go forward and make India a leader in all spheres.

So are we going to make use of our demographic advantage and take India forward? Are we doing everything to channel the energy of our youth into a productive force or are we letting it dissipate and finish? Let us look at the state of MBA education in India where most of the energy of our youth is being spent on. Our youth want to do acquire MBA so that they become more employable but there is a problem of access because of which there is short supply of MBAs. FICCI says, “There is a question of access for those who want to do a management course.” Notwithstanding mushrooming of MBA institutes in all parts of India, there is a vast shortage of MBAs today. Supply lags behind demand leaving our economy high and dry without much needed manpower. So how do we remedy this supply-demand mismatch? We must make MBA education more accessible to our youth. We need to build infrastructure in those tier II and III towns where a vast majority of our youth can avail them and get education of his desire.

Second most important issue is the issue of quality of education. Creating physical infrastructure without any ingredients which can add value and quality is a self defeatist step. It will do no good. Many reports present a very disturbing picture as far as the quality of our manpower is concerned. There was a report by Meritarc in 2007 (Talent Pool Report 2007) that only a three out of four MBA graduates are employable. McKensey also reported that only one tenth of all graduates in India are employable. According to FICCI , “There is also an issue of quality as B schools, both in public and private university system, range from very good to very bad”. So both these two issues can be described as the heart of the matter. Firstly it is the need of the industry to have more men and secondly it is the need to have more employable men. So both number and quality (read employability) is important.

So how do we move forward? What steps do we take for a better future? National Knowledge Commissions set up by the government in 2005 constituted a Working Group to study the problems related to management. Sam Pitroda , who is the Chairman of Knowledge Commission, formed this Working Group which included PM Sinha, Former CEO of Pepsi , Prof. Amitava Bose, Former Director, IIM Calcutta, Prof. Jahar Saha, Former Director, IIM Ahmedabad, Prof. K.R.S. Murthy, Former Director, IIM Bangalore, Dr. Nachiket Mor, Dy. Managing Director, ICICI Bank, Mumbai and Mr. R. Gopalkrishnan, Executive Director, Tata Sons, Mumbai. The Working Group represented both industry and the academia.

Private Investment
According to the Working Group of NKC it is essential to stimulate private investment in higher education as a means of extending educational opportunities. It says, “We must recognise that, even with the best will in the world, government financing cannot be enough to support the massive expansion in opportunities for higher education on a scale that is now essential”. But NKC does not encourage setting up for-profit educational institutions by private players. But the government, it says , must have provisions which can stimulate not-for-profit private investment A complete not-for-profit education set up by a private player will compromise the quality and hence will defeat our purpose.

But we have problems in the fee structure in the private institutions today. As FICCI says, “The fee charged has no relation to cost or quality of education or the subsidy they receive from government (in case of government institutions." So there is a need for standardization of fee structure. This at best could be left to the market forces. More liberal policies will ultimately weed out the anomaly and inconsistency.

Regulation and its mechanism
The government has so far conducted the entire business of higher education with tight regulation. It has regulatory bodies like AICTE, BCI, MCI which control approval, accreditation, etc. But the Knowledge Commission has a view that the existing regulatory framework constrains the supply of good institutions, excessively regulates existing institutions in the wrong places, and is not conducive to innovation or creativity in higher education. It further says the challenge is therefore to design a regulatory system that increases the supply of good institutions and fosters accountability in those institutions. An independent regulator has to be the cornerstone of such a system. FICCI in its report on Regulatory Framework on Technical Education last year had recommended dissolution of AICTE .While talking to Just Careers, FICCI had said, “As the organizational structure and functioning of AICTE is more in sync with public institution, which are given budgetary support by the State and /or Central Government, there is negligible representation in the Council from the self-financing private universities/higher education institutions and the industry. Hence the AICTE is unable to address the issues that are specific to self-financing private technical education providers and the changing needs of the industry”. ISB, Great Lakes do not have AICTE approval but still ranked among the top institutions in India. But will that affect quality? For this FICCI propose alternative benchmarking mechanism which is different than what is being in practice and conducive to innovation and creativity in management education.

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Students have to have access to MBA education which provides them quality education and a degree which they can use to pursue their career in the corporate world. Private institutions provide them an opportunity to do this as the intake in the government funded institutions is limited. Private B Schools which have invested their resources to built good quality institutions are the best option for those who do not get a seat in IIMs. Even in some cases, those who can afford , Some private B Schools are far better option than many IIMs as they score high on infrastructure and they are at par with IIMs on faculty strength, industry integration, etc, as is the case with ISB, Hyderabad, Those private Institutions which have not gone for AICTE approval because of the reasons of stifling regulations as discussed provide a dual degree programme which provide students the best of the both worlds. They get an MBA degree from a UGC recognised degree and PGP from the institute. While a UGC recognized degree will help them in case the students go for a government job, there will not be any such constraints as far as jobs in private sector is concerned. I asked Siddarth Thapliyal of Manpower Inc, Gurgaon, "what matters most when you hire somebody?" He answers, “Profile of the person matters the most. However, it is as per the levels. For starters, it is important to mention the strength and higher education is strength. If you are from a better institute then it helps as hiring managers have certain opinion about these institutes. When you grow in a particular profile, then slowly the criteria shift to the experience”.

So when companies and recruiters hire, they first look at the candidate and then at the B schools. Famous private B schools have been consistently producing best management professionals in India. Today we have very discerning aspirants who do not want to settle for anything but the best. So they go for those B schools which give them the best. So the trend is towards utilizing the best of both worlds- a degree which is recognized by UGC and a college which has best in faculty, infrastructure, industry exposure, etc.

But this system again is open to exploitation. So what should be done to check exploitation so that fly-by-night kinds who resort to all kinds of marketing gimmicks to trap students into their net are completely weeded out of the system? One is let the market forces prevail. Competition can work and make them out of the system. However, Prof C S Venkatraman, Member, FICCI Higher Committee & Director, IMI , Delhi and Shobha Mishra , Joint Director & Team Leader, Education & Health Services Division, FICCI, has this suggestion, “Self-regulation mechanism should be integrated in the system through setting up of an Internal Quality Assurance Cell (IQAC) within an institution making it mandatory for all education providers to do it. The other way to check is to compel B-schools to ensure mandatory disclosure of ranking, information about infrastructure, full time faculty and their qualifications and experience, publications and research and placement details, etc. explicitly on the website for the benefit of students and parents to make informed choice. There should be strict reward and penalty mechanism in place to disincentivise any kind of misinformation. In case of any wrong or misleading information, students and parents should approach on their own or through civil society to consumer courts and take the B-schools to task and make them pay the penalty. This would act as a strong deterrent. The government should invest resources in providing access to library and information resources and data based through inter library on line access at nominal rates and also give grants to institutions based on performance and placement record, among others”.

A discerning aspirant and a market force will ultimately decide the extent of success of the B schools. Within the system that does not “promote creativity and innovation” private B schools try and give the students best in all respect. Aspirants must grab the opportunities and pursue their most cherished dream and must have an open mind to learn and a willing heart to work hard during their courses.