There has been an upsurge in the demand for management education in India in the recent past. With the top business schools securing conspicuous placements in the "New World" at salaries that, when converted into Indian rupees, dwarf even the inflated cost-to-company packages of their Indian counterparts by a big margin, this demand is likely to grow in the near future.
Without a doubt, quality of placement is among the most important attribute that aspiring management students look at when applying to a B-school. The higher the compensation package, the more applications can be expected in the future for the B-school in particular, and for management education in general.
This year more than 1,75,000 students registered for one of the most popular screening tests for business education, that is, the common admission test conducted by the Indian Institutes of Management. Of these 1,250 will be admitted to the IIMs while the rest will try their chances in the 100-odd private management institutes that use CAT for short listing candidates.
This gives IIMs a massive acceptance ratio of 1: 140, far above the international benchmark of 1:10, thus making the IIMs collectively the most difficult institutions to secure an admission offer.
One possible way to decrease this ratio for IIMs and, perhaps, a number of other B-schools that use CAT for shortlisting could be to extend the shelf life of CAT scores from one year to, say, three years, to begin with.
In the prevailing system, a student's application to a specific B-school is based on expectations rather than knowledge of her performance in the admission test. Thus, she applies to a large number of B-schools hedging her risk as much as possible.
On the other hand, if like the GMAT, the CAT score was valid for a longer period and the student knew the range of scores of earlier admitted students to an institution, she could choose to apply only to those that she perceived maximised her chances of selection.
Students would, thus, select institutions to apply to, based on complete information and not merely on an expected score. While the number of applications to a particular institution would decrease, I do not think the quality aspect would be affected at all. Instead of being rejected by the institution, a student whose performance in CAT is not within the range of acceptance will simply not apply to the institution at all. One challenge in implementing this proposal, of course, would be to devise a test that is comparable not only across space, but also over time.
Another interesting aspect of the selection process is the use of different admission tests by different business schools, unlike the US where GMAT is used as a standard test score.
The Indian government tried to introduce a common admission test for B-schools but the Supreme Court ruled that "private educational institutions have a personality of their own, and in order to maintain their atmosphere and traditions, it is necessary that they have the right to choose and select the students who can be admitted."
In India, aspiring candidates come from a variety of academic streams such as engineering, liberal arts, science, commerce, and medicine, thereby providing a very rich inter-disciplinary classroom experience.
The merit of a common entrance test therefore, could be, and as a matter of fact, has been debated. Extending the validity of a test, such as the CAT, once administered, may also be worth debating in the public domain.
The author is a professor of economics at IMI and a consultant with Trai