D K Srivastava, director of Madras School of Economics, is disappointed when he sees 50 Master's students graduate every year with lucrative job offers.
He is unhappy because none of the 50 students apply for a PhD or doctoral degree and the Chennai-based institute is finding it difficult to attract high-quality students for this programme.
Like the MSE, the poor response to programmes for Economics PhDs (the abbreviation of the Latin Philosophiæ Doctor) appears to be a chronic problem in India.
"The best brains are going to industry after completing the Master's degree," said Srivastava, who has specialised in public finance and economic forecasting. "This is the malaise of good institutions where highly qualified students don't stay back," he added.
Even the Indira Gandhi Institute of Development Research, a premier institute set up by the Reserve Bank of India for research in development issues, found it difficult to attract students for its PhD programme a couple of years ago.
MSE admits two or three students every year for its doctoral programme, a third of what it can accommodate. Aggregate data on the number of students completing their PhD in Economics are not available.
While PhD programmes run by universities across India have faced problems in attracting high-quality students for a long time, it is only now the top economic research institutions are facing the problem of student shortage, given the jobs boom that is attracting the best and brightest among Master's students.
Though there are globally recognised Indian economists like Nobel Prize winner Amartya Sen and trade economist Jagdish Bhagwati, universities based in India have not kept pace with cutting-edge research produced by their counterparts in the United States and Europe, resulting in poor research output.
Three issues - faculty profile, poor scholarship funding and job opportunities - are being cited as reasons Indian universities have failed to attract good quality students, said four economists, including three heads of the institutions, who were contacted for this article.
For the few students who want to pursue a PhD, foreign universities have emerged as a viable option. These overseas institutions are targeting Indian students and are offering liberal scholarships that are hard for Indian counterparts to match, said D M Nachane, director of IGIDR.
Research scholars in Indian institutes are mostly paid between Rs 6,000 per month and Rs14,000, except in a few management institutes where they are offered around Rs 25,000 a month. Compare this with foreign universities that provide a tuition fee waiver and a monthly stipend ranging from $800 to $1,500, depending on the financial strength of the institute and its location.
Both Nachane and Srivastava agree that it's vital to increase the scholarship amount to attract students and provide an alternative within India. Both, MSE and IGIDR are exploring ways to increase their scholarship amount. Delhi School of Economics did not respond to a questionnaire.
Students graduating from Master's programme in MSE and IGIDR get job offers in the salary range of Rs 600,000 and Rs 800,000 a year -- mostly from banks, financial institutions and consultancies. Candidates even after completing the PhD would get only Rs 50,000 more than what a Master's level students would get, said IGIDR's Nachane.
"The opportunity cost for a student with Masters Degree to pursue a PhD in economics is very high," he added referring to Rs 600,000 salary the PhD student would have earned for four years, if employed.
Apart from scholarships, the faculty profile and the syllabus play an important role in attracting students. "What I learnt ten years ago is not even offered here in India," said Parth J Shah, economist and former professor of Economics at the University of Michigan.
Lack of quality faculty is often linked to salary structure in Indian universities that fail to differentiate between a professor who has done cutting-edge research with publications in leading journals and faculty who has only concentrated on teaching. "The sixth pay commission will solve this problem because it allows flexibility in salary structure," said Nachane.
But for Shah, who is now involved in a not-for-profit research and education institution Centre for Civil Society, the solution could also lie in giving choices to institutes to decide whom to affiliate.
At present, an institute present in a city has to affiliate in a university based in that city. "The geographical monopoly of the universities should be broken. This will create competition among the institutions," he added.
In the meantime, every year around five students of Madras School of Economics come back to pursue research after working for a couple of years in the industry. But, as of now, they come to MSE to prepare for admission to foreign universities and Srivastava is hoping that some will stay back in days to come.