Indian institutions of higher education function at a sub-optimal scale compared with some of the best in the world. Indian Institute of Technology (IIT) Bombay, my alma mater, is one of the larger IITs in India. It nevertheless has only about 8,000 students, while the Massachusetts Institute of Technology (MIT) has over 11,000 students and is part of the larger Boston educational area with more than a quarter of a million students. Oxford, Cambridge and Harvard all have around 20,000 students each. Some of the publicly-funded universities in the US such as Michigan and Pittsburgh have over 35,000 students. The University of California system has 250,000 students, with each of its campuses having 20,000 students. In comparison, IIT Bombay has not grown much over the years; in 1978, when I had joined, it had about 3,500 students.

Indian universities could have been larger; the total students on their campuses across all disciplines would not add up to more than a few thousand, typically much less, scattered over several campuses. We have denied scale to our publicly-funded higher education and, as a result, we have ended up with a high fee structure for students.

The cost of a year of student education in most of the leading IITs and Indian Institutes of Management (IIMs), for instance, is about half of that of the leading schools in the US at rates of compensation to faculty and staff that are less than a sixth. If IIM Ahmedabad itself were to double its strength to match that of Harvard Business School, its unit cost would fall by 30%. Thus money is wasted due to limited scale. Starting new IITs and IIMs would increase the real social cost of a seat by more than three times the long-run marginal cost of expanding existing IITs and IIMs. And expand they can since they have ample land and only need a paradigm shift in their conceptualization of a good campus. The great campuses of Harvard, MIT, Pennsylvania and other city universities have activity and residence densities between five and 15 times that of IIMs and IITs.

IIMA, which in this regard is more efficient than other IIMs, could easily accommodate another three schools with a more compact campus through efficient architecture. But then, our regulations define higher education as requiring a campus that has a minimum of 100 acres. Efficient use of land further reduces the currently high interaction cost today in many of these campuses, and can add to the social value of activities, including that of living. The approach of locating a new institute far away from urban places imposes upon it the avoidable administrative burdens and the need to provide all services, however below scale, within the campus. Thus they have to create their own shopping, residences, children’s schools, canteens—all of which, being below scale, would have poor quality and service levels.

Perhaps more than cost, or the inefficient use of land, or even the indifferent provision of support services, through such an approach, the core functions of knowledge creation and education are weakened; and however hard the institute tries to overcome these defects, it is not able to catch up. Without scale, there cannot be scope, and without scope, there cannot be quality education.

If there are only 500 students in a business school, then we cannot have a law or public policy faculty, or a real estate group, that is large enough (at least 15 strong) to be viable, given its own scale. So, we have to make do with academics who are implicitly sacrificing their own professional advancement by being part of sub-optimal faculties. Thus, some of our top institutes of technology find it difficult to have a world-class humanities faculty. There is the double debility therefore: lack of scale and of scope.

The consequence of being sub-scale is that many professors have to go beyond their competence to give a worthwhile portfolio of subjects to their students. Professional interaction within a faculty declines, and an academic with high potential would think many times before risking his or her career to being part of a group which is too small for impact or collective reputation building.

In contrast, the schools and university systems of nearly all the rest of the world (China included) are able to have scope—many schools and departments in close proximity so that students are not denied a wholesome portfolio and faculty members can have colleagues to professionally interact with. Even tiny Singapore, in the design of Nanyang Technological University, Singapore Management University and National University of Singapore, ensures scale and scope. Coping with such design errors means that many administrative functions have to be missed, faculty members have to get involved in administration as in many of the leading IIMs; and stretch out over many more disciplines and topics. The latter tendency, even if it does not hurt graduate (MBA) education, would badly hurt research and doctoral programmes.

The All India Council for Technical Education grants approval for 60 students the first time for management. Imagine a private or charitable trust trying to set up a school. Few would be able to afford a library of more than a few thousand books, when the minimum number that one can imagine for a business school is 100,000; while many global universities have over 3 million books. Technical schools with large lab requirements would have to cheat the students of their practical work. Quality becomes the sacrificial lamb.

Since the public sector institutes suffer from scalability, the question arises if some of the private institutions in higher education will be able to fill this void in quality. Some of the well-meaning private universities, which have picked up scale, might be able to get on to the path of higher quality, but this is unlikely and would take decades, if not more.

Nowhere has the private sector done well in actually providing high-quality higher education, not even in the US, without a large role for the state sector. This is because education, especially higher education, is a so-called experience good not easily amenable to objective ex-ante measures of quality—without a state sector, price itself can become a measure of quality, resulting in vast exclusion.

The failure in India is well evidenced by the fact that around 90,000 students from India go abroad every year to seek higher education. They know well that beyond the IITs, IIMs, National Institutes of Technology, Indian Institutes of Information Technology, a few colleges of metro universities and some older private schools which have kept their heads above water against the odds, the quality falls precipitously.

Obviously the government would be better off by pressuring well-performing IITs and IIMs and other schools within its direct control to expand and diversify by giving them autonomy but demanding performance in quality and quantity terms. Indeed, around them can then emerge the new world-class universities covering the sciences and social sciences. For that to happen, Indian officials and politicians would have to go against the belief that giving grants to schools gives them the right to intervene and micro-manage.

Sebastian Morris is a professor at IIMA and has interests in public policy, economic development, infrastructure and international trade and investments.

This article presents the author’s personal views and should not be construed to represent the institute’s position on the subject.

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