AHMEDABAD: Indian Institute of Management, Ahmedabad (IIM-A) said its "innovative" approach to give waiver of fees to needy students was the reason why the Union Human Resource Development Minister agreed to allow over 100 percent fee hike at the top business school.

"What we have done under the new (fee) scheme is that we charge full cost of the programme to those who are capable of paying it, while decided to provide assistance to those who are needy to ensure that education at IIM-A is accessible to all deserving students," IIM-A Director Sameer Barua said.

Due to this innovative approach, IIM-A Chairman Vijaypath Singhania was able to convince HRD Minister Arjun Singh in their meeting at New Delhi to allow the institute to hike its fees, Barua told reporters here.

The IIM-A last week decided to increase its fees from about Rs five lakh to Rs 11.5 lakh for its popular two-year post graduate programme. Singh had called the IIM-A Chairman for a meeting to seek explanation on the issue.

The IIM-A has raised the limit of financial assistance from Rs 40 lakh per annum earlier to around Rs 8.50 crore per year for needy students, Barua added. Under this graded scheme, all students with annual family income of up to Rs six lakh will be eligible for waiver of tuition fee, he said.

The waiver is 100 per cent for students with annual family income of up to Rs one lakh while the waiver is about 82 percent for students with annual family income of Rs 2 lakh.

"Based on the family income of the students who qualified for admission after CAT last year, more than 65 percent of them would benefit from the fee waiver scheme," Barua said. Explaining reason behind the fee hike, the director said in June 2007, the IIM-A had carried out a rigorous costing exercise with the help of independent experts to determine true cost of the post graduate programme (PGP).

"The institute engaged services of a nationally reputed cost accountant. Based on the actual costs for 2006-07, the cost inflation over 2007-08 and 2008-09 and the assessed increase in costs arising from recommendations of the Pay Commission, the cost of the PGP 2008-09 was computed at Rs 5.5 lakh per student per year," Barua noted.

The corpus fund set up by the IIM-A, an autonomous body under the HRD Ministry, has gone down to less than Rs 50 crore due to various expansion projects, the Director said. "We were eating our own corpus fund and the institute was running in deficit.

After the additional burden by the way of recommendations of the Sixth Pay Commission, the dent would have been higher," he informed. Barua conceded that fee hike proposal was discussed in the IIM-A Board of Governors' meeting in December last year.

"That time the IIM-A had not decided to raise the fee by more than 100 per cent, but after the recommendations of the Pay Commission we decided to charge full cost of the programme from those who are capable to pay," Barua said. "With this fee hike we expect that the position of IIM-A would be slightly better.

There are proposals to increase the fees of other courses also," Barua added. He further said the institute would negotiate with leading banks for special loan packages for students admitted to the post graduate programme.

The institute would continue to implement the government scholarship scheme for scheduled caste and scheduled tribes students. These students would also be eligible for the fee assistance scheme based on family income, sources in the IIM-A said.