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7th Pay Commission woes: B-Schools weigh funding options to bear additional costs

IIM Calcutta is open to varied ways of raising funds, including increasing the number of executive training programmes and alumni endowments

Nirmalya Behera & Vinay Umarji  |  Bhubaneswar/ Ahmedabad 

With the implementation of the 7th Pay Commission recommendations set to bring in additional cost on salaries and pensions, top B-schools are weighing options to bear the same. From hiking fees to increasing executive education programmes, B-schools including the Indian Institutes of Management (IIMs) are looking at ways to raise funds to match the salaries of faculties and staff in line with the pay panel recommendations. However, IIMs feel the real impact of the 7th Pay Commission implementation cannot be gauged immediately. "Faculty salaries are not determined unless the UGC Pay Revision Committee, and then a possible IIM/IIT Committee, announce the pay scales (for faculty). The impact will be clear only then," said an IIM Bangalore spokesperson. Among the various options, IIM Calcutta director Saibal Chattopadhyay ruled out the possibility of a fee hike. "Hiking the fees cannot be a solution. We periodically hike fees to take care of inflation marginally. Program fees are already hiked. Just for the Pay Commission, the students should not be asked to pay more. We will have to find other ways," he said. Instead, IIMs said that they are open to looking at other options to raise funds to bear the additional cost arising out of the 7th Pay Commission. For instance, IIM-Ahmedabad has planned to increase the number of its executive education programmes to enhance its revenue to bear the additional cost. "We also plan to focus on high-end programmes with higher revenue and increasing research-based funding," IIM-A told Business Standard. IIM-Calcutta, on the other hand, is open to varied ways of raising funds, including increasing the number of executive training programmes and alumni endowments. "One option would be to think of more executive education programmes and charge them more since they come from corporates who can afford. But there is always a price elasticity to keep in mind. Given that there are different types of executive programmes, long term and short term, the institute will have to internally come up with innovative schemes without affecting the existing ones.

Raising funds through alumni endowment is also an option," said Saibal Chattopadhyay, director, IIM Calcutta. IIM-A, too, stated that it was open to raising funds through alumni endowments. The premier B-schools are yet to calculate the exact impact of the 7th Pay Commission implementation on their cost of salaries and pensions. For the financial year 2015-16, IIM-A had an outgo of Rs 41.37 crore towards salaries and Rs 20.44 crore for retirement benefits. IIM Calcutta, on the other hand, paid around Rs 33-34 crore the same year, including salaries, according to Chattopadhyay. Apart from fees collected from post graduate programmes, major sources of revenue for IIMs tend to be executive education programme, consultancy, research as well as alumni and corporate endowments. For IIM-A, the size of current corpus stands at around Rs 98.03 crore as on March 31, 2016. Premier B School Xavier Institute of Management - Bhubaneswar (XIM-B) is planning to bring a change in fee structure to deal with 7th Pay Panel burden. "Depending on the impact of the Seventh Pay Commission, we will increase the fees. General perception is that if the impact of the 7th Pay Commission is 15-17%, then fees may go up by 9-10%. A proposal will be put before the governing board for decision," said Father Paul Fernandes, Director, XIM-B. XLRI-Jamshedhpur, too, has plans to implement pay panel suggestions. "Historically, our salary structure for faculty members is better than UGC and IIMs pay structures. However, keeping in mind the 7th Pay Panel recommendations, a provision has already been made and interim pay hike has already been given to faculty members. The arrears will also be paid ", said Sunil Varughese, chief brand and sustainability officer, XLRI - Xavier School of Management. A decision on fee hike for the flagship programmes will be taken in June next year as part of the routine process. Generally, the hike is with an upper cap of 5-7%, Varughese added.

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First Published: Thu, August 04 2016. 17:02 IST
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