The HRD ministry's decision to reduce the fee for the IIMs has sparked off a storm. The faculty and the students are against this reduction, because they are worried that their increased dependence on the HRD ministry will erode their autonomy.

But what is the proper fee for education at the IIM? The answer to this is connected with the larger issue of public education. Since the government has limited resources, a balancing must be done between the investment on basic and professional education.

No one can quarrel with the current policy that every child attend schools that are free and of as good quality as possible. But the reality falls short of this policy. We do not have schools in all villages, or in all required locations in the urban areas. Thirty percent of our population cannot read, and the world's most illiterates for any country live in India. The schools are often too far away for children to walk, denying millions of boys and girls a real opportunity to have an education. This is unacceptable.

The IIM Controversy: Complete Coverage

Meanwhile, the standards at government schools are declining. Things have changed a lot since I was a boy, when I attended government schools in six different towns in Jammu, Ladakh, and Kashmir, and got an excellent education in the process. Now people from the middle classes are pulling their children from these schools and paying through their nose for private schooling.

For example, on a taxi ride from Chandigarh to Shimla, my driver explained that although he made only Rs 5,000 per month, he sent his only child to a private school where the fee was Rs 2,000 per month. For a poor person to spend forty percent of his income on middle school education reveals the extent of the rot in government schools. Clearly, more must be invested on school education than is being done now.

Given this context, it is logical to make professional colleges as self-funded as possible. By reducing the fee for IIM from Rs 150,000 to Rs 30,000 when it costs Rs 300,000 to educate the student, the subsidy for professional education is being increased even further, which can only be to the detriment of basic school education.

Then there is the question of salaries. There is a saying that the salary is like a shoe, it should not be too small that it pinches, nor too large that the foot comes out when one walks. Since IIM professors are paid less than half of what a young graduate of the institute makes at his first job, the salary cannot be considered adequate.

The IIMs need more autonomy, not less, and permission to opt out of the government salary and retirement age structure which is too inflexible to hire the best talent. There must be room in the system to reward exceptional ability, which is not possible to do in an overly centralized scheme.

The IIMs may be great at training students for their first degree but they are not, by any means, world-class when it comes to research. India, as the world's fourth largest economy, requires a few elite institutes that focus on research. But if the resources available to the IIMs shrink, as would happen when the fee is reduced, the task of making them world class will become even more difficult.

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A government-controlled educational institution is like a government-run business. We are selling public sector companies because the bureaucrats who run them neither have the proper expertise, nor sufficient autonomy. Although administrators at government academic institutions do not lack expertise, they don't have enough independence. I personally believe that the government should have a central role (although not the exclusive one) in higher education, but it is time to review how higher education has been administered in the past and develop a reformed system where there is more decentralization and accountability.

It is not helpful to compare the costs of the IIMs to private institutes that teach management courses. The IIMs must be viewed as national centers where, in addition to training students, cutting-edge research is done on business, management, and the interface of technology, society, and commerce. The decisions by those who understand the dynamics of technological change are often as important, if not more, than those who implement the technology. The IIMs must devote effort to develop innovative new solutions to old problems of management in the private and the state sectors. But to develop expertise in new areas would require even more resources than they have now.

Higher IIM tuition is a necessary pain that the society must accept in order that the resources that are saved can be invested in improving schools in villages and in the poorer areas of the cities. To ensure that no qualified student finds the fee too onerous, the government could facilitate award of bank loans through its guarantees. Since the graduates of the IIMs will be able to return the loan amounts in a short time, it is not too much of a burden.

Shifting a large share of the cost of IIM education to the private sector will free up resources for basic education. Why is that a bad idea?