Union Budget 2023-24: Funding for IIMs brought down to Rs 300 crore

The Indian Institutes of Management (IIMs), which are counted among the noted business schools in the country, have faced a budget cut this year with the Centre reducing their grant by half.

The top institutes, however, believe that the move might hurt new IIMs but not the second or first generation IIMs.

There are 20 IIMs across the country.

In the budget for 2023-24 announced by Finance Minister Nirmala Sitharaman on Wednesday, the funding for IIMs has been brought down to Rs 300 crore from the previous fiscal year's Revised Estimate (RE) of Rs 608.23 crore, a 50.67 per cent drop, even when the net budget for the fiscal year 2023-24 rose by 8 per cent amounting to Rs 44,094 crores for the higher education sector.

According to the Budget Estimates (BE) for 2022-23, the IIMs were allocated an amount of Rs 653.92 crores.

According to IIM Udaipur Director Ashok Banerjee, the government might be sending signals to IIMs to be more innovative in funding their growth plans.

"The cut in budget allocation for the IIMs may hurt the newer IIMs, the latest IIM is about seven years old though," Banerjee told PTI.

However, through this cut, the government perhaps is sending signals to the leadership of individual IIMs to be more innovative in funding their growth plans like promoting use of PPP model and also to the industry to support academic institutions of national importance through CSR initiatives and other donations," he said.

The major cut in the budget for IIMs has been under the support from Gross Budgetary Support (GBS) head.

The allocation for the purpose was Rs 296.81 crore according to the RE for 2022-23 while the BE allocation was Rs 323.50 crore. For the new financial year (2023-24), the allocation under the head has been reduced to Rs 15.17 crore.

"IIM Rohtak has never hung on to any government grant. We generate our total revenue from various training programmes remote and on campus and tuition fees. Though we are a second generation IIM, this halving of funds will not affect us. New generation IIMs might have to depend on government grants," said Dheeraj Sharma, Director, IIM Rohtak.

Ajit Parulekar, Director of Goa Institute of Management (GIM), said there might not be anything specific for B-school education in India, but the finance minister talking about a National Data Governance framework was one of the highlights of the budget.

"This framework will allow us to get access to a lot of non-personal, anonymous data. Research-intensive institutions will benefit greatly from this because one of the biggest hurdles one needs to overcome during the conducting of research is the lack of data," he said.

"The only disappointment is that even though there is an increase in the budget for education, it is marginal. It is very low for a country that aims to grow fast. We are underspending on healthcare and education by a very large margin," he added.

Ashutosh Dash, Associate Professor, Accounting and Finance, Management Development Institute (MDI), Gurugram said, "Though the provisions made in the budget will improve the education infrastructure in the country as a whole, the reduction of gross budgetary support from 323.5 crores in 2022-23 to 15.17 crores in 2023-24 might have a huge impact on the growth and development of newly established IIMs."

"To implement the NEP 2020 in the true spirit, the best institutions and universities of the country have been given an additional Rs 4,235.74 crore but how much can the share of IIMs be is unknown yet," he said.