The real number of institutes shutting shop differs as per various estimates. According to a 2013 survey by ASSOCHAM, about 450 institutes have become defunct. The rough estimates are that about 250 B-schools have shut shop (some have not informed AICTE) and an even higher number are on the verge of shutting down.
While a debate on the attractiveness or value of MBA education in India continues, there is an urgent need to review whether new institutes should be allowed to set up shop. If yes, is there a need to review the process?
The new government has to put its best feet forward on this.
The previous governments have allowed mushrooming of B-schools in the last decade without any concern for quality, and as a result a large number of stakeholders are suffering. Has anyone imagined what happens when a B-school is shut down?
Let's look at the students, around whom the education system should ideally revolve. They are affected in at least the following ways:
1. No alma mater: Alumni network is crucial in long term career development and success for MBAs. When an institute is shut down, the alumni have no alma mater. They do not have an official platform for networking.
2. Degraded perception: When an institute is closed down, its products (students) are looked down upon. It is considered that as the institute could not survive, it lacks quality. Even meritorious students hugely suffer.
3. Advanced education: If an ex-student of such an institute wishes to get admission into advanced education in India or abroad, he has to face several challenges during the process, such as in getting recommendation letters, apart from gruelling questions during interviews.
4. Job market: Even prospective recruiters do not treat these students well. Their bargaining power is diminished substantially.
In the absence of institutional support, the careers of several students of such institutes suffer. In the same way, there is an impact on the career of the faculty which taught at these institutes.
Therefore, while the government looks at it as it as a closure of "business", is it not shutting down the gates of dreams and passports to successes? Has the indiscriminate opening up of the education sector done more harm than good?
This gloomy picture is just the tip of the iceberg of the "business of management education". If we add the list of hundreds of institutes running without any AICTE approval or university affiliation, many of which are cheating students in various ways, I call it a shame on management education. Different governments have allowed conducting such shoddy businesses in the name of imparting quality education.
As a result, the MBA degree is highly diluted. Nowadays MBA degrees do not promise even a job, leave alone handsomely paying, high flying careers. No surprise that the number of applicants to the common admission test (CAT) are on the decline. The 2013 survey by ASSOCHAM states that only 18 per cent students from the B-category business schools land job offers. Other recent surveys have also questioned the employability of pass outs from these B-schools.
Therefore, it is high time the new government takes immediate, long-term and concrete action to ensure high quality sustainable management education that does not function just as a placement support, but helps in creating knowledge, promotes innovation and invention in addition to awarding degrees. Like banks who are custodian of depositors' money, management institutes are custodians of intellectual property created by the students and faculty. As banks cannot shut shops arbitrarily, B-schools should not be allowed to be closed in such a way. I suggest the following minimum actions on the part of the new government.
Firstly, no new educational institutes should be allowed to set up shop until the current mess is cleaned up. Secondly, there has to be a mechanism by which these institutes are either not allowed to shut shop or if they do close down, their entire intellectual property is taken over by a nearby university/ institution. This would ensure that the entire intellectual work created during the lifetime of an institute by the faculty (research papers, projects, etc) and students (project reports, research, etc) is not lost and at the same time, the alumni have some place to go when needed. Thirdly, non-approved institutes should not be allowed to run such programmes through some legislative actions.
My personal opinion is that instead of focusing on creation of new institutes, the first task of the current HRD minister should be to clear the current mess, benchmark the existing institutes with the global best to raise the quality and performance bar and then think of expansion, if required.
When the plate is full, the focus has to be on finishing it, instead of ordering new dishes!
(The author is Executive Director, MDRA)
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