Learning difficulty

One year after the seed of an idea was planted, the Adani Institute of Infrastructure Management (AIIM) is due to open later this year in the western state of Gujarat. The campus is still under construction but 30 students are expected to enter its halls this September to start a one-year course in infrastructure management.

It is the first management programme in India to focus on infrastructure, even though the need for such training is obvious to any visitor who has experienced the country’s power cuts and chaotic streets.

India’s rapid growth cannot be sustained without development of roads, power, ports, water treatment plants, urban transport and airports. But less obvious to the eye is the urgent need to boost the country’s education sector and reform the strict regulatory environment that hampers its growth.

“If India is to achieve an accelerated gross domestic product growth rate, then a very important constraint is physical infrastructure,” says Vijay Thadani, chief executive of NIIT, the Indian information technology education group. “But some believe that more important than that is human infrastructure.”

Bakul Dholakia, director of AIIM, agrees. “Now that we’re talking about India becoming a knowledge economy, that can’t happen without top-level education,” he says.

More than half of India’s population of 1.1bn is under 25. Yet without access to education and better skills training, this “demographic dividend” could be a huge liability if millions of uneducated and unemployable young people languish without jobs.

Establishing AIIM and more institutes like it seems an obvious move; demand for higher education far outstrips supply.

According to a report from Ernst & Young and the Federation of Indian Chambers of Commerce, only about 11 per cent of those eligible to enrol in higher education in India do so, compared with about 60 per cent in the US and Canada and about 21 per cent in Brazil, Russia and China, the other so-called “Bric” countries. For admission to India’s top business schools, approximately 290,000 students registered for the entrance exam in November 2008, to compete for just 1,800 seats.

Yet newcomers with high hopes of starting sorely-needed universities talk about being thwarted by bribe-demanding officials, bureaucracy over land acquisition and seemingly arbitrary government accreditation. Higher education institutes are stymied by tight government regulations that control everything from admissions requirements, tuition, faculty salaries, minority quotas and curriculum.

The swiftness of building AIIM is an anomaly in India and stems from the institute’s influential backers.

AIIM’s deep-pocketed and well-connected founder is Gautam Adani, chairman of the Adani Group, the Gujarat-based infrastructure conglomerate that owns India’s largest private port. Having already ventured into power, textiles and logistics, the Adani Group has set its sights on education. It plans to invest $100m in the next three to five years in education and hopes to set up a medical college and a university.

Mr Dholakia, meanwhile, is former director of the Indian Institute of Management at Ahmedabad (IIM-A), one of India’s most prestigious business schools, established in the 1960s and nurtured by Harvard Business School.

During his five years as director of IIM-A, Mr Dholakia fought government control. In his new role, he stresses the urgent need for infrastructure management in India. But two words he shies away from when talking about AIIM are “university” and “MBA”. Universities in India fall under the jurisdiction of the central and state governments. Only universities can grant a master’s degree in business administration.

“To establish a new institution, especially if you want to launch an MBA programme, you have to go through the formal process of approval from [government regulator] AICTE,” Mr Dholakia says. “State-level institutions need approval from the ministry of education. National institutions need approval from AICTE. That is a long, drawn-out process.”

So to skirt government influence, AIIM will grant a certificate from what it calls its postgraduate programme in infrastructure management. Two-year programmes are government-regulated, so AIIM’s programme is just one year.

“A one-year programme is still not regulated, fortunately for this country. That is why I launched it,” Mr Dholakia says.

The Indian School of Business has taken a similar tack. Instead of awarding an MBA, it offers a certificate from its one-year postgraduate programme. Since it opened its doors in Hyderabad in 2001, ISB has become one of the most respected business schools in India. But in order to maintain its autonomy, the school has not sought official government accreditation.

“We consciously chose not to be part of that,” says Kumara Guru, assistant director in the dean’s office at ISB. “The decision was taken by the board of the school. It’s not that we want to be away from the government. But the regulatory mechanism in its present form is more control-oriented than growth-oriented.”

ISB was founded by business leaders who saw the critical need for higher calibre education in India. Rajat Gupta, a former managing director of McKinsey & Company, the consultancy, spearheaded the effort and roped in India’s most influential business leaders to back ISB in 1996.

Mr Gupta, now chairman of ISB’s governing board, was a graduate of the prestigious Indian Institute of Technology in New Delhi and Harvard Business School and had experienced the best of both educational worlds in India and the west. He wanted to establish a new model in his homeland. “He felt we needed a school that was truly global in India,” says Mr Guru.

ISB is not government-accredited but that did not stop Prime Minister Manmohan Singh from visiting its campus three years ago. And ISB is at work planning another campus in the northern city of Chandigarh, again funded by Indian business leaders.

Yet even India’s most successful institutions of higher education are still hamstrung by regulation. One-year programmes skirt government restrictions but they have their own limitations.

“It is a costly proposition,” says Mr Dholakia. “You can’t get thousands of applications. You can’t get large class size. In an initial period of four to five years you have to sustain on low intake and high fees.”

The challenges for higher education were clearly laid out in recommendations from the prime minister’s National Knowledge Commission in 2006. Among its proposals, the commission suggested: establishing 1,500 universities in India from about 400 currently; setting up an independent regulatory body for higher education; and tapping both public and private sources of investment.

Foreign universities are keen to enter the Indian market but are restricted from setting up campuses. Still, many have forged relationships and exchange programmes with Indian institutions. Foreign direct investment in higher education is also limited.

“We need five times more investment,” says Mr Thadani of NIIT, who also heads the education committee of the Confederation of Indian Industry, the country’s largest business association. “We need to encourage FDI and corporate sector investment.” But Mr Thadani acknowledges that foreign investors and universities are wary of entering India’s tightly-regulated environment.

Mr Dholakia argues that the problem could be easily solved if institutes of higher education were able to decide their own policies.

And although he has been one of the harshest critics of government intervention in education, Mr Dholakia is hopeful that change could come to the sector. “Sooner or later, the government will realise that giving greater autonomy to education is the way forward,” he says.

Amy Yee is an FT contributor