RBI stays bullish

The RBI's growth forecast in its just unveiled annual monetary policy, I am pleased to say, is identical to mine:

In view of these factors, overall, for policy purposes, real GDP growth in 2008-09 may be placed in the range of 8.0 to 8.5 per cent, assuming that (a) global financial and commodity markets and real economy will be broadly aligned with the central scenario as currently assessed and (b) domestically, normal monsoon conditions prevail.

The central bank, being a central bank, has hedged its forecast with the mandatory qualifications but these are not terribly consequential. I don't see any reason to think that the global outlook will change materially; and the news on the agricultural front has been good.

Remember, every single forecast on the Indian economy in the past five years has been an under-estimate. So, I wouldn't be surprised if growth hits 9%. That would be the decisive deathblow to those who claim that the spurt in economic growth was a fluke created by the global boom. If you can grow at 8-9% in these conditions.........

MBA education- old wine in new bottle

I zoomed in on an article in today's ET by Yale Management School Dean , Joel Podolny, with high expectations. It's titled "Transforming the MBA for the 21st century". I must confess I was more than mildly disappointed. The problem Podolny identifies is familiar enough but I can't see anything novel or striking in the solutions he proposes.

The problem:

There are two fundamental drivers behind the demand for changes in business education and MBA curricula. The first is that the world of management has changed tremendously from the 1950s. Then, a typical manager could spend his or her entire career within a single function — say, marketing or finance — of a large bureaucratic organisation.

There was thus a strong alignment between these careers and MBA curricula that were siloed by related disciplines. But organisations have become increasingly flat, and the leaders of modern enterprises competing in the global economy are looking for managers who are capable of leading and managing across the boundaries of function, geography, and sometimes even organisation, industry, and sector....

The second driver is that today’s students learn in a way wholly different from the way students learned in the 1950s or even in the 1980s. The Internet, the 24-hour news cycle, the popularity of social networking, and almost instantaneous ‘on-demand’ access to knowledge have all contributed to a significant shift in the mindset and the learning process for the 20-somethings now entering our MBA programmes.

Okay, so what are the solutions? Podolny proposes two. One is a "raw case". This, it turns out, is not a case in a specific area- finance, marketing or production- but one that spans multiple areas and contains reams of text and material, perhaps running into a thousand pages! The other idea is to put the material online.

Sorry, I am not bowled over. The "raw case" that Podolny talks about is already there in many places, including, I daresay, IIMA. We call it an "integrated case" and we often have three or four faculty in the classroom teaching it together. If this is new to Yale, all I can say is IIMA is way ahead.

As for putting material online instead of giving it out as hard copy, that too has been practised by several b-schools for years now- and, yes, we have it this too at IIMA today.

If this is Yale's idea of "transforming the MBA", my suggestion to American (and overseas) students is that they consider applying to IIMA.

Too many IITs ?

I would not have thought this merited a serious debate but since one is on in right earnest, let me add my two cents to it.

Creating an IIT in a state has an impact similar to setting up a railway junction- also sorts of developmental impulses radiate out of it. The state or area in which IIT is located certainly gets a boost. So, if you have the resources, go for it. IITs can command resources of a higher order than plain colleges or universities, there is a certain discipline which the IIT system brings along with it, and there is also scrutiny and assessment that is qualitatively superior.

The problems will be there- notably, finding good faculty- of course but those problems would be there even if were to invest in colleges that did not carry the IIT tag. A potentially favourable factor is returning NRIs- some may just find it worthwhile to be in their home states and may be willing to sacrifice the prestige of being with one of the older IITs especially if these are people in their forties and above and have already made a reputation for themselves.

I also think that creating competition from IITs - and IIMs, for that matter,- is a good thing although it will be a long time before the new entrants pose a threat to the entrenched players.

What about the problem of "brand dilution"? I don't see any cause for apprehension. The three top IIMs have not suffered in the slightest because three other IIMs have come up and a fourth one is due. Nor have IIM- Indore and IIM- Kozhikode been able to ride on the reputations of the older IIMs. The pecking order in most rankings is the top four IIMs followed by several other non-IIM institutions with IIM-I and IIM-K coming way below. We can see the difference clearly in the new fee structures that the IIMs have proposed- the market leader, IIMA, is way ahead of the rest.

SC judgement in OBC quota case

The SC judgement in the OBC quota case is seen as a politically correct judgement- it allows quotas (which will please the reservationists) but disallows the creamylayer, which will please opponents of quotas.

Well, that may well be the outcome but it would not be correct to suggest that was the intention. A careful reading of the judgements suggests that it is based on a careful interpretation of the Constitution and the formidable case law that has accumulated on reservations. I read the judgements and was left with a sense of admiration for the fundamental justness of the verdict. My comments on a couple of legal aspects and the implications of the judgement are there in my ET column, Expect quota battles to continue.

The thirteen key legal questions and the answers to these are summarised in Chief Justice Balakrishnan's judgement. I reproduce this portion:

Questions:

1. Whether the Ninety-Third Amendment of the Constitution is
against the "basic structure" of the Constitution?

The Constitution (Ninety-Third Amendment) Act, 2005 does
not violate the "basic structure" of the Constitution so far as it
relates to the state maintained institutions and aided educational
institutions. Question whether the Constitution (Ninety-Third
Amendment) Act, 2005 would be constitutionally valid or not so far
as "private unaided" educational institutions are concerned, is left
open to be decided in an appropriate case. (Paragraph 79)

2. Whether Articles 15(4) and 15(5) are mutually contradictory,
hence Article 15(5) is to be held ultra vires?

Article 15(5) is constitutionally valid and Articles 15(4) and
15(5) are not mutually contradictory. (Paragraph 100)

3. Whether exclusion of minority educational institutions from
Article 15(5) is violative of Article 14 of Constitution?

Exclusion of minority educational institutions from Article
15(5) is not violative of Article 14 of the Constitution as the minority
educational institutions, by themselves, are a separate class and
their rights are protected by other constitutional provisions.
(Paragraph 102)

4. Whether the Constitutional Amendment followed the
procedure prescribed under Article 368 of the Constitution?

The Ninety-Third Amendment of the Constitution does not
affect the executive power of the State under Article 162 of the
Constitution and hence, procedure prescribed under Proviso to
Article 368(2) is not required to be followed.
(Paragraph 103)

5. Whether the Act 5 of 2007 is constitutionally invalid in view of
definition of "Backward Class" and whether the identification
of such "Backward Class" based on "caste" is
constitutionally valid?

Identification of "backward class" is not done solely based on
caste. Other parameters are followed in identifying the backward
class. Therefore, Act 5 of 2007 is not invalid for this reason.
(Paragraph 142)

6. Whether "Creamy Layer" is to be excluded from SEBCs?

"Creamy Layer" is to be excluded from SEBCs. The
identification of SEBCs will not be complete and without the
exclusion of "creamy layer" such identification may not be valid
under Article 15(1) of the Constitution. (Paragraph 152)

7. What should be the para-meters for determining the "creamy
layer" group?

The parameters contained in the Office Memorandum issued
by the Government of India, Ministry of Personnel, Public
Grievances and Pensions (Department of Personnel and Training)
on 08.09.1993 may be applied. And the definition of "Other
Backward Classes" under Section 2(g) of the Act 5 of 2007 should
be deemed to mean class or classes of citizens who are socially
and educationally backward, and so determined by the Central
Government; and if the determination is with reference to caste,
then the backward class shall be after excluding the creamy layer.
(Paragraphs 153 and 155)

8. Whether the "creamy layer" principle is applicable to
Scheduled Tribes and Scheduled Castes?

"Creamy Layer" principle is not applicable to Scheduled
Castes and Scheduled Tribes. (Paragraph 163)

9. Whether the principles laid down by the United States
Supreme Court for affirmative action such as "suspect
legislation", "strict scrutiny" and "compelling State
necessity" are applicable to principles of reservation or
other affirmative action contemplated under Article 15(5) of
the Constitution?

The principles laid down by the United States Supreme
Court such as "suspect legislation", "strict scrutiny" and
"compelling State necessity" are not applicable for challenging the
validity of Act 5 of 2007 or reservations or other affirmative action
contemplated under Article 15(5) of the Constitution.
(Paragraphs 184)

10. Whether delegation of power to the Union Government to
determine as to who shall be the backward class is
constitutionally valid?

The delegation of power to the Union Government to
determine as to who shall be the "other backward classes" is not
excessive delegation. Such delegation is constitutionally valid.
(Paragraph 186)

11. Whether the Act is invalid as there is no time limit prescribed
for its operation and no periodical review is contemplated?

The Act 5 of 2007 is not invalid for the reason that there is
no time limit prescribed for its operation, but a review can be made
after a period of 10 years. (Paragraph 187)

12. What shall be the educational standard to be prescribed to
find out whether any class is educationally backward?
The contention that educational standard of matriculation or
(10+2) should be the benchmark to find out whether any class is
educationally backward is rejected. (Paragraph 189)

13. Whether the quantum of reservation provided for in the Act is
valid and whether 27% of seats for SEBC was required to be
reserved?

27% of seats for other backward classes is not illegal and
the Parliament must be deemed to have taken into consideration
all relevant circumstances when fixing the 27% reservation.
(Paragraph 193)

Damn those meetings!

I have alway felt that meetings everywhere and always are unproductive and a bore. If meetings are held at all, the time spent on these should be minimal. I was happy to see these views echoed in an FT article:

Does anyone ever walk into a meeting fired up with enthusiasm? Or do they groan in anticipation of the politicking, the bureaucracy and the office bore taking up what little oxygen remains in the room? And, in any case, all the decisions have probably already been taken, haven’t they?

Jim Buckmaster, the unconventional chief executive of Craigslist, the internet classified advertising company, is no fan of meetings. “I’ve always found them to be at best unproductive and boring, and at worst toxic and destructive,” he says. “The people who want to show off do, the brown-nosers brown nose, everyone else wastes their time. I also think the larger the meeting, the worse it is.”

Sixth Pay Commission Report

I had meant to post this comment long back but it just escaped me. I wrote about the Sixth Pay Commission (SPC) report in my ET column. Let me just add a few thoughts here.

• As I point out in my column, the perception that the Commission has gone overboard in increasing government servants' pay is wide of the mark. Yes, they have been generous with grade A employees and there too only in respect of those of the rank of Joint Secretary and above. For the rest, the increases recommended are modest. The ratio of top pay to lowest pay has, as a result, moved up from around to 12. The nominal increase on the average is of 13%, including pensions. Excluding pensions, the increase in pay and allowances may be slightly higher- 15-20%. My guess is that, in real terms, the increase relative to the pay of a decade ago is negligible.
• In the months preceding the Commission's report, commentators had set up a terrific drumbeat as to how the SPC would devastate goverment finances. In fact, the fisc will hardly feel the impact- 04% of GDP is the first year impact, including arrears. In about three years' time, the impact wears off. What on earth were these commentators talking about?
• There is a perception that government is getting fatter. Wrong. It is getting leaner. In two ways. One, through attrition- jobs falling vacant through retirement are not getting filled. Two, increases in manpower have not kept pace with increase in government revenues or GDP. Compensation to government revenues has fallen by a third over the past decade. This is a measure of downsizing. People don't see it because employees have not been fired. But this is cleverer downsizing- let revenues rise, don't let manpower costs rise as fast. It is a form of downsizing that doesn't hit the headlines and hence is politically more manageable. It is the only sort of downsizing that makes sense in a democracy such as ours.
• How to make government more efficient? One element is reasonable compensation. Not that pay in government can ever be on par with the private sector but private sector pay does serve as a distant benchmark. The problem today is that private sector pay has soared into the stratosphere, so pay in government lags behind. The answer, as I point out in my column, is more frequent revisions in government than once in 10 years. The SPC has failed to make this recommendation. However, there are other sensible proposals- running pay bands that end stagnation in a given pay scale is an overdue reform. At present, people are stuck at the top of their scale for years!
  
• Instead, the SPC takes the view that there be selective rewards linked to performance- a private sector idea. I'm afraid given the problems in measuring performance in government and politicians' tendency to abuse such schemes, this just won't work.
• One last point: the SPC favours market-based pay for regulators. The chairman of SEBI or IRDA can make Rs 3 lakh per month. Alas, this won't fly. I can't see the top bureaucrats allowing this. If the cabinet secretary must get less than the president, why should regulators be in a different category?
  

Justice Raveendran on OBC quotas

In my last post, I had flagged an issue that troubles people in states such as Tamil Nadu. There is a huge quota for OBCs. On top of this, OBCs get in through the merit pool. The total OBC representation thus exceeds the quota limit which itself is generous. Can this happen in central educational institutions now that the Supreme Court has rejected the challenges to the 93rd Amendment?

Justice Raveendran flags this issue in his judgement but refrains from expressing an opinion:

<>

<>I would however leave open the question whether members belonging to other backward classes who get selected in the open competition field on the <>basis of their own merit should be counted against the 27% quota reserved for other backward classes under an enactment enabled by Article 15(5) of the Constitution, for consideration in an appropriate case.

My guess is that this may not be a problem in the elite institutions to start with. Once the 'creamy layer' is excluded, it will not be easy to fill up the 27% earmarked for OBCs.

But, yes, over time, it could be an issue. That is why I say that we must monitor total OBC representation: watch the percentage of OBCs in the quota category and also in the general category. Cut-offs for quotas and definitions of OBCs must be revised periodically so that total OBC representation amounts to 27%.

OBC quotas and the 'creamy layer'

The SC judgement on OBC quotas is in. The focus now turns to implementation. There are two issues as I see it:

i. How do we define the 'creamy layer' for education purposes;

ii. Whether the 27% quota is to be introduced at one go or in phases as the Moily committee had recommended.

On the latter, I just saw on TV that Ramadoss wishes to have 27% at AIIMS right away. I have favoured phased implementation not just because it is politically more acceptable ( to those adversely impacted) but also because we are not clear as to how OBC representation in educational institutions will be impacted by the 27% quota. Let me, therefore, focus on (i) above.

I have not had a chance to go through the judgements myself. From what I could make out from newspaper reports, the 27% quota is subjected to several constraints:

• 'Creamy layer' to be excluded. For jobs, the definition was those from families with income of Rs 2.5 lakh per annum. It appears that, on top of this, the present judgements impose several other criteria: children of those occupying certain high posts or belonging to certain vocations, graduates, etc. Whether these are mandatory or indicative is not clear. On TV yesterday, I heard several people say that each state has evolved its criteria for determining the 'creamy layer'. It is upto the HRD ministry, I suppose, to clarify what criterai would apply to central educational institutions.
• Private unaided institutions are not covered by the existing legislation. On whether fresh legislation can be framed to cover them, all judges except Justice Bhandari are reported to be silent. Justice Bhandari is said to have taken the position that private, unaided instiutions fall outside the ambit of the 93rd constitutional amendment.
• Graduates do not qualify as backward, hence there will be no OBC quota in post-graduate courses. This is one issue that needs to be resolved quickly because we have to determined whether quotas apply to the likes of IIMs or not.
• There is to be a review of the quota level after five years. Again, whether this is merely a suggestion or a direction needs to be clarified.
• The OBC quotas will be subject to minimum eligibility criteria. According to some reports, the difference between the eligibility cut off for the general pool and for the OBC quota should not exceed 5 marks (some say 5%). What this means for IIMs which follow the percentile system is not clear- is the OBC cut off 5 percentile below the normal one or 5 marks below the normal one. My guess is that the latter would be much lower than the former. The Moily committee itself had a sentence to the effect that quotas should not be at the cost of institutional quality- this meant that institutions could exercise their discretion in judging how far they should go to accommodate OBCs.

On the face of it, it would appear that the constraints imposed by the SC will result in a representation for OBCs below the 27% intended. On TV yesterday, I heard dalit activist and scholar, Kancha Iliah, say that the combination of 'creamy layer' and higher fees at educational institutions would prove lethal to the cause of OBC quotas- those with incomes below Rs 2.5 lakh would be sufficiently intimidated by the increasing levels of fees not to seek admission; those could afford the fee would be ineligible. The 27% quota would remain a dream.

Iliah argued that the additional seats being created for OBC quotas would end up being appropriated by the higher castes ( the SC judgement apparently says that seats not filled by qualifying OBCs must go the general pool). Thus, OBC quotas would have the perverse effect of giving greater representation to the higher castes than they enjoy at present!

How plausible is this scenario? Health minister Ramadoss (who was on the same show on Times Now) made the point that 17 years after the implementation of Mandal I, OBC representation in government was just around 5%. If the same happens with educational institutions, I guess the upper castes would be richer by 22%!

However, I am not sure we can extrapolate from the experience with government jobs. People have cited some surveys done in educational institutions (where quotas do not exist at present) that show that OBC representation is quite high even now- on the TV show yesterday, somebody mentioned a figure of 24%. It may well be that OBCs who graduate from good institutions do not seek government jobs, hence the representation in education does not translate into commensurate representation in government.

Iliah may be right: outside the 'creamy layer', not enough people may qualify to meet the quota of 27%. But he overlooks one fact: 'creamy layer' OBCs may be getting in without any concessions, on pure merit, that is. The objective should be overall OBC representation of 27%, not 27% through quota plus whatever OBCs get in the general category. This translates into a higher than mandated representation for OBCs in many states such as Tamil Nadu and is the cause of much of the anti-reservation sentiment.

So we need to monitor OBC representation in the general pool and that in the quota pool and see whether the total approaches 27% or not. This is why phased implementation is desirable. Start with 7% or 10% in the first year for quotas and see what the total OBC representation, including that in the general pool, is. Adjust the definition of 'creamy layer' accordingly.This gives us an empirical basis for defining the 'creamy layer'. It will be so defined as to ensure that OBC representation in the general pool plus that in the quota category amounts to 27%. It also gives us a basis for setting cut-off levels of marks for quotas.

HBS is 100

Harvard Business School, the mother of them all, turned 100 on April 8. There is a critique by Stella Bradshaw in FT. It's a critique as much of the MBA degree as of HBS:

Strip away the hype surrounding the MBA, though, and it is difficult to come up with hard evidence to prove that 100 years of management education, and the MBA degree in particular, have been beneficial to business or society. Indeed, even among its proponents, many are questioning whether business schools teach the right things, in the right way, to the right people.

..........Given the obvious popularity of the MBA, it may seem strange that business schools, particularly in the US, are facing a crisis of confidence about what they teach. One of the biggest issues is surprisingly similar to the dilemma faced by Harvard 100 years ago: that is, the extent to which business schools should teach the practical and research the theoretical.

The 'crisis of confidence' in the quote above is for real. Unlike in law and medical schools, faculty lack the conviction they are adding value. Motivation is low amongst students in the second year because only the first year grades are made available to recruiters. This means that how you fare academically in the second year doesn't have a bearing on the job you will land. Take care of the first year grades and you have made it.

I liked the variations in the FT article on what MBA has come to mean: Mediocre but Arrogant, Master of Brainless Axioms. A student from Insead is quoted in the article as saying that the MBA programme is a 'bullshitter's paradise'.

Soros on the financial crisis

George Soros lashes out at market fundamentalism:

For the past 25 years or so the financial authorities and institutions they regulate have been guided by market fundamentalism: the belief that markets tend towards equilibrium and that deviations from it occur in a random manner. All the innovations – risk management, trading techniques, the alphabet soup of derivatives and synthetic financial instruments – were based on that belief. The innovations remained unregulated because authorities believe markets are self-correcting.

Regulators ought to have known better because it was their intervention that prevented the financial system from unravelling on several occasions. Their success has reinforced the misconception that markets are self-correcting. That in turn allowed a bubble of excessive credit to develop, which extended through the entire financial system. When the subprime mortgage crisis erupted it revealed all the weak points. Authorities, caught unawares, responded to each new disruption only after it occurred. They lacked the ability to foresee them because they were in the thrall of the market fundamentalist fallacy. They need a new paradigm

HRD ministry okay with IIMA fee hike

That's what the media has reported today:

After a meeting with HRD minister Arjun Singh, IIM-A board chairman Vijaypat Singhania ruled out a review, but added that enough scholarships would be available to support meritorious but poor students. Against Rs 40 lakh earmarked for scholarship, the amount now would be Rs 8.5 crore, covering 62% of students.

There are two issues here:

1. Do scholarships address the problem? Let's see... Rs 8.5 crore for 62% of students or around 360 students. That's Rs 2.4 lakh per student against the fee of Rs 11.5 lakh. On the average, qualifying students (the eligibility limit now is Rs 6 lakh of family income) would have to cough up Rs 9 lakh- nearly double the existing fee. This is the extent of help that IIMA's tuitution waiver and need-based scholarship will give- where ordinary students face a tripling of the fee, "needy" students face a doubling. IIMA's move to increase financial support is laudable but, on the average, the increase in the burden on the students remains high.

2. Should educational institutions pass on full costs to those who can afford to pay? This is taxen as axiomatic by many. But the principle that subsidies through scholarship are required only for needy students while the rest pay market-related fees is open to question. As I have said repeatedly, quality, non-profit institutions do not accept this principle. Higher education is subsidised for all. It's just that the subsidy is greater for the needy.

In the best schools, costs are seldom recovered in full through fees from students on the ground that students have the capacity to service loans. Fees cover only a portion of the costs for any student. I read that the IITs follow the rule that one-third of costs are recovered from students, one third from consulting and one-third from government funding.

At the best universities in the US, private endowments cover part of the costs for any student. On top of this, Harvard has a total exemption from tuition fee for those coming from families with income of upto $60,000 and a slightly lower subsidy for those coming from families with income of upto $100,000. And this in a culture where the family does not necessarily bear the educational costs of the child. At IIMA itself, the practice has been to cross-subsidise PGP through other income. If the IIMs do not wish to accept government funds, it would be worthwhile for them to explore fully other sources of income - consulting, endowments- that will help them cover a portion of the cost of the PGP.

Anyway, HRD minister Arjun Singh may have been convinced about the rationale for the IIM fee hike but not his precdecessor, Murli Manohar Joshi:

''It is a decision of the elite, by the elite and for the elite,'' Dr Joshi remarked, adding ''it will put a damper on Indian middle class dreams of good management education. Dr Joshi called for an audit of educational institutions built with taxpayer funds. ''It is high time there is an academic and financial audit of institutions built on public money and government mandate.''

Sorry, the Hyde Act does apply to us

We have been going back and forth on the Indo- US nuclear deal for a while now. One of the strongest arguments mounted in favour of the deal has been that the Hyde Act is a purely domestic legislation of the US. We will be bound only by the 123 agreement with the US. Advocates of this line will be swiftly disillusioned by this report in Rediff from its Washington correspodent about the recent discussions that a US Congresionnal delegation had with the Indian government:

The Massachusetts Democrat (Ed Market) reiterated, "So what I did was just to raise for them what the law of the United States is with regard to the impact that a nuclear explosion would have since the section, which is being amended is the Section 123 of the Atomic Energy Act and the Non-proliferation act of 1978, and obviously the Hyde Act amends that to make it possible for have a transaction with India."

Markey said that while the delegation was in India, the debate continued to rage 'inside India as to whether or not -- the Hyde Act was the final arbiter'.

The delegation had impressed upon all Indian officials and parliamentarians that India has to abide by the provisions of the Hyde Act, he added.

He said the delegation had pointed out to the Indian officials and parliamentarians that US Secretary of State Condoleezza Rice [Images] had assured the US Congress that 'the Bush Administration intends on abiding by the Hyde Act and we made it clear that the Hyde Act was the law of the United States when we were there -- when we were speaking with all of the various groups that we met with."

Asked if there was an appreciation by Dr Singh and his senior Cabinet colleagues and others that it was the Hyde Act that superseded the 123 Agreement, Markey said: "I hope so. The discussion turned exclusively while we were there on the Hyde Act -- that was the discussion. And, whether or not, the Hyde Act was binding upon the President of the United States, which we assured them, it was."

Business Standard on IIM fee hike

BS today has an edit today on the IIM fee hike. Let me dissect a couple of points it makes because these reflect the conventional wisdom:

1. Amazingly, faculty at the IIMs and IITs, being government institutions, are subject to these (UGC) pay-scales too. They not only lag their global counterparts by a huge margin — even in purchasing power parity terms — but also their colleagues in private institutions in India who are by no means generously paid.

We should expect compensation (including housing) at the IIMs to amount to around Rs 15 lakh after the Sixth Pay Commission. This does not include consulting income. Now, Rs 15 lakh is about Rs 45 lakh in PPP terms- or $ 110,000. That does not strike me as "lagging global counterparts by a huge margin".

2. To be sure, the UGC scales will continue to apply, but with higher fees the IIMs will have the flexibility to consider solutions similar to those followed by many public sector banks. Like any government-owned institution, senior bankers in public sector banks suffer the malady of low pay scales. To get round this, many such banks offer valued senior executives contracts that are more in tune with private sector salaries and outside the purview of government scales.

I don't know of many quality institutions that offer superior pay to faculty on a contractual basis. That's because you can't set targets for output over a contracted period. Even chair positions at top schools abroad are on a tenured basis.

In any case, I must question the presumption that higher fees will translate into higher pay for faculty. None of the IIMs, so far as I know, has made this connection. As far as I can make out, higher fees are meant to cover increased costs on the existing basis and to preempt the need to go to government for funds.