Are sprawling IIM campuses justified?

The IIMs have campuses that sprawl across 100 acres of more or land. They produce less than 3000 MBAs put together, says Nirmalya Kumar in an article in ET. He believes this is inefficient use of a scarce resource, land. Is this true?

There are two components to this point. One, the IIMs don't need sprawling campuses in order to meet their educational objectives. Two, given that they have so much, the IIMs can produce more postgraduates or doctorates.

To take the first point, Kumar argues that London Business School operates on less than 5 acres and graduated 1000 students this year. Why can't the IIMs do likewise? Maybe they should sell off most of the land they are sitting on?

I am not sure this is a valid argument. Both faculty and students in London (and other western cities) can easily rent apartments over a wide range of rentals. In Indian cities, it is rather more difficult, so there is a case for a campus that will obviate the need for people to look around for a place. Public transport in many places is nowhere as good as in London and there can be difficulties in commuting to work as well. Many cities may not be as safe those in Europe or North America. So, for the smooth functioning of the school, a campus may be required.

Secondly, the IITs and IIMs are governed by the Pay Commission framework and are restricted in the pay they can offer faculty. Campus accommodation is a valuable perk and we know from experience that for NRI faculty wanting to relocate to India, it's a big attraction. One would, therefore, make out a case for a campus on grounds of promoting academic excellence.

Having said that, there remains the question of whether the IIMs are producing enough graduates to justify the land on which they are sitting. One reason often trotted out is that the IIMs are unable to attract quality faculty. I do not entirely buy this argument. As Kumar points out, it should be possible to bring in visiting faculty from overseas. This does not happen, nor is recruitment of faculty vigorous enough, because it suits the IIMs to limit the intake. This enhances the scarcity value of an IIM product and hence the value of the IIM brand itself, and it limits competition to existing faculty. I have made a reference to this issue in my recent book, Brick by Red Brick: Ravi Matthai and the Making of IIM Ahmedabad.

It does appear to me that the IIMs work backward from a high average salary in determining what should be the intake of students. Whereas the need of the country is for a large number of MBAs. In recent years, the IIMs have had to increase their capacity by 54% consequent to the introduction of OBC quotas- this is the most significant scaling up in the IIM system since they were set up! So they could do it when they were driven to by law. Why can't they scale up on their own as well- and provide better justification for the land they are using?