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The last days of an IIM professor
Ajit Balakrishnan
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November 10, 2006

In that darkened room in Hyderabad, I could see that the muscular arms that once smashed a table-tennis ball at blinding speed were now skeletal. The full head of hair had now only a few strands from repeated bouts of chemotherapy. Even a slight movement on the bed made him grimace with pain.

A flurry of email among the Indian Institute of Management alumni had brought me to Hyderabad that morning. "Professor Iyer is dying with cancer," announced one mail. "They say there is an experimental drug that could help; he has ordered it from the US but he has no money to clear it when it arrives next week."

Ramu Iyer taught computer science at IIM Calcutta in 1969, a year when Bill Gates was eleven years old and a decade before Intel and Microsoft, the defining companies of the modern information technology era, were founded. Many of his students are multi-millionaires, board members and CEOs of world-scale companies.

"Does it pain much," I asked and immediately felt stupid; of course it did, I could see the pain in his face. "How is your business," he asked, pointedly ignoring my question.

We talked for the next few hours about what was going on in the technology world, his mind eager to keep up-to-date, mine trying to find an opening in the conversation when I could ask the question that the IIM alumni had deputed me to ask -- could we help out with the money needed for his drug?

To ask a professor at whose knee you learned everything that you know whether he needed the money to buy a drug that might save his life is a difficult thing to do. What has failed here, you wonder. The way we have organised Indian society that its teachers live a life of penury while their students prosper? Our health care system with its medical insurance schemes that extend to very few? The callousness of the business world, which, preoccupied with growth and investment, doesn't ever cast an eye on the fountainheads of their success: schools and colleges and teachers?

In the Indian system, an IIM professor's salary is fixed through the Pay Commission, that gigantic exercise that happens once in 10 years, when compensation levels of five million central government employees are re-set, and 20 million others at state and municipal levels and government-owned companies and semi-autonomous bodies like the IIMs and the IITs follow using a similar formula.

It works on an apparently egalitarian principle, a 1:11 ratio for lowest-level peon to chief secretary and a system of equivalences: an IIM professor's post is equated to other posts in fisheries, mines, customs, income tax, defence, All-India Radio, Doordarshan. Either all get a raise or nobody gets one. Except that an IIM professor needs a high-quality PhD and has unlimited job opportunities as every country in the world gears up its management schools.

The fallacy of the Pay Commission system is that it prevents market forces from working in the job market. By keeping the salaries of college professors low by equating them to a dozen different types of civil servants, it slows down talented people from staying on for PhDs and then teaching at colleges, which results in colleges like the IIMs not being able to increase their intake, which leads to artificially inflated salaries for their graduates, which causes resentment in government circles, which leads to more Pay Commission demands. . . and the cycle continues.

What prevents the Pay Commission method of compensation-setting being broken, in spite of many recommendations that it be abolished, is the vast "distributional coalition" (a term coined by the Nobel Prize-winning political economist Mancur Olson) of state sector employees, who are adamant that all of their members be included in the Pay Commission.

A distributional coalition, according to Olson, is overwhelmingly oriented to struggles over the distribution of wealth and income to its members rather than to the production of any additional output. Distributional coalitions also keep societies stagnant by preventing re-allocation of resources. By artificially equating salaries across large swathes of the economy, market forces, which direct people away from low-utility jobs to higher-utility ones, are not allowed to come into play.

The darkening afternoon reminded me that I had to catch a flight back to Bombay. I bade goodbye to my professor knowing that it was probably the last conversation that I'd have with him. His wife escorted me to the door. As we stepped out of range of Ramu's hearing, she burst into tears: "I don't know what to do-I am so scared ."

I did not say anything, I merely smiled sympathetically because I too was worried; for Ramu Iyer, what would happen to his wife after his time, and a system where a professor could die for want of an amount that his students get as starting salaries. And the seeming impossibility of dealing with the vast distributional coalitions that keep our country in their grip.

A few of us alumni put up the money for Ramu Iyer's cancer drug though it did not help and Ramu Iyer died soon after. I would like to imagine that wherever he is now, he has the solace of knowing that at least his students had not forsaken him even if the giant bureaucratic system that he served for so long had no thought for him.

Ajit Balakrishnan is the founder and chief executive officer,
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