S P Kothari, deputy dean of the MIT Sloan School of Management of one of the America’s top universities, the Massachusetts Institute of Technology (MIT), was in India last week to discuss launch of the India Trust, a partnership with key corporates here at the Indian School of Business, Hyderabad, to promote further education and research for India-centric activities. In an interview with Jyoti Malhotra, he says MIT has similar partnerships in China (with three universities), Russia, Turkey, Brazil and Korea. Edited excerpts:
Tell me a bit more about the India Trust.
It is still in the making, but we have people like Adi Godrej, Baba Kalyani, Vikram Kirloskar and Damodar Ratha, all of whom are MIT alumni and who wanted to do something to make a difference in India, for the benefit of India and Indians.
What is the outcome of your partnerships in other countries?
We send faculty to universities with which we have partnerships, to help develop faculty in their countries and at MIT for a semester or so. We have been doing this for the past 15-18 years.
How do you look at education in India?
India represents a huge growth market in education. It has a vast population which is not as educated as in the West. MIT would like to further this education process, perhaps by transferring curriculum and helping Indian faculty become better educators. In return, we expand our exposure to a culture very different from ours.
Would MIT be interested in setting up shop in India?
There is some hesitation. MIT has a 1,000-faculty and our hallmark is they’re all producers of knowledge. The question is, can this be scaled up? Can we think of a model where we can have satellite campuses and maintain the quality created at MIT? Can the MIT model be replicated? We are grappling with this question, as are Harvard and Yale and Stanford.
Is this about money?
To a certain extent. MIT, like other top US educational institutions, has a huge budget which allows us to maintain top standards. The question is if similar financial amounts be raised in countries like India to sustain the high quality of teaching. MIT’s operating budget is upwards of $2 billion ('9,000 crore) per year and we take only 10,000 students. Harvard is similar. It would be foolish for MIT to think we can replicate this model without paying attention to the socio-economic level of the country in question. These countries may not have an economic capacity to sustain an educational institution like MIT or Harvard or Yale.
But is it only about money or also about skills?
The two are related. To have that 1,000-faculty, you have to have a much larger pool. One top quality institution cannot exist in India in isolation; there has to be much larger investment in education. As a percentage of total GDP, expenditure on education is much lower in India, it has to go up (in the US, it’s about five per cent).
Also, India will have to make concentrated bets in creating pockets of excellence. If you spread resources equally across all fields, unless they are huge resources, they will not make the kind of difference you’re hoping for.
How do you compare education in China?
In China, planners have attracted far greater FDI, which allows them to divert the money they would have spent on infrastructure, for example, into education.
As an economist, how do you compare the crisis today to the recession in 2008?
The situations are different. In 2008, the financial sector imploded, which forced the government to intervene; otherwise, there would have been chaos. Today, the major problem is one of adjustment. In 2008, we offered a lot of entitlement benefits which people got addicted to and we are now trying to wean them off, which is difficult. The deficit has become very large, so we’re trying to rein that in.
On outsourcing, as an economist, I would say if someone else can produce at a cheaper cost, then so be it. We cannot be protectionist; that will only come back to bite you in a worse fashion. But retraining the workforce takes time and is also gut-wrenching.
In a presumed double-dip, emerging markets like India and Russia will also be impacted?
Yes, we are all in this together. The blowback may not be as bad because the benefits of outsourcing will still continue in India and China for some time.
So, the moral of the story is that India should not be integrated with the West?
India is at a very different stage of development, still $1,200; in the US we’re still $45,000 per capita. Even if the recession brings it down by five per cent, which would be a severe recession — in 2008, the contraction was only four per cent and look at the impact it had — we would still be over $40,000 per capita. What India has to focus on is how to go from $1,200 to $5,000 per capita. That in itself is a huge leap and it will take a couple of decades, if you maintain eight-10 per cent (annual) growth.
The challenges in India are very different. What you need, first and foremost, is a huge amount of investment. Only the West still has money, but you have to attract it if you want to grow rapidly. There are 500 million people in India who don’t have a toilet. No matter how much outsourcing you do, if you need the 500 million to get toilets, you need investment.
What is the perception about India?
The perception is challenging, which is why foreign direct investment is not nearly as high as what you would like to see. The system has to be much more decentralised. The reason you can’t absorb these opportunities is that you haven’t made the environment more conducive. Mexico and Bulgaria get much FDI on a per capita basis than India.
Does the centre of gravity move to Asia?
The centre of gravity will surely move to Asia as India and China grow, but smaller populations like Canada or New Zealand/Australia will still continue to do their own thing. You can have the centre of gravity on Mars, it doesn’t matter. What matters is how you spend the money on improving living standards for your population.
