ARE INDIAN B-schools in a bubble, as some experts are claiming that American colleges are? Joseph Schumpeter, in a recent article in The Economist entitled The Latest Bubble? argues the American higher education bubble is already beginning to burst. He quotes PayPal cofounder, Peter Thiel, “Higher education fills all the criteria for a bubble: tuition costs are too high, debt loads are too onerous, and there is mounting evidence that the rewards are over-rated.” This claim is also applicable to Indian B-schools. With more than 3,000 such schools in the country, India has three times more B-schools than the US. This difference becomes stark when one considers that the size of the Indian economy is one-tenth of the US economy. The result is poor quality education and an oversupply of MBA graduates which, in turn, increase unemployability and underemployability among graduates. According to economists Karl Case and Robert Shiller, a bubble represents “A situation in which excessive public expectations for future price increases cause prices to be temporarily elevated”. In other words, a bubble simply represents an over-estimation of future expected returns. Based on this simple definition, we can clearly see that Indian B-schools are in a bubble. On the demand side—from students and families—expectations of social prestige and career advancement from an MBA degree are reaching a level of irrational exuberance. Similarly, on the supply side, promoters’ expectations of earning easy money are also blown out of proportion. One of the characteristics of a bubble is “herd behaviour”. This can be seen in the large number of students who continue to aspire to an MBA degree. MBAs are perceived to offer a safe and rewarding career path. This perception, and accompanying herd behaviour, are largely driven by the salary war (read: inflated salaries) among B-schools and corresponding media frenzy associated with corporate top pay packages. The social prestige associated with an MBA has also contributed to the demand for MBAs. One crude indicator is the matrimonial classifieds, where an MBA degree is often positioned as a measure of success and achievement. We can also see it when someone says that they have an MBA vs MEd—we are already judging that the person with an MBA is “better” than one with an MEd. These social stereotypes of MBAs as a measure of success have contributed to undue and irrational expectations for people to pursue them. On the supply side, given the appetite for MBA degrees, many entrepreneurs and politicians have seen an opportunity to make easy money. The barriers to entry to start a B-school are quite low, both in terms of financial and regulatory requirements. These barriers are even lower if one ignores the regulatory requirements. In addition, the emergence of new models—especially the one-year MBA and distance learning—have accelerated the supply of MBA programmes, many of which are not recognised by AICTE. The result is too many unrecognised, poor quality MBA programmes in the market. So, what is the way out? One of the ways out seems to be the foreign universities bill which is hanging fire. India must wake up to the need for internationalisation of higher education and put in place a policy framework to address concerns, if it wants to reap the benefits. The foreign universities bill has turned out to be like a car with square wheels. Though the bill is still awaiting approval of the Parliament, it has generated excitement among many institutions in India. There are questions about the bill’s effectiveness and relevance. Also, there are a few foreign institutions, like Lancaster University, which decided not to wait for the bill and have started their campuses in partnership with GD Goenka. This is an example of how a disjointed approach can render a policy irrelevant. It highlights the need for a comprehensive internationalisation policy on higher education which can maximise the relevance and benefits at three primary levels: infusing excellence, encouraging institutional diversity and building capacity. Jane Knight defined internationalisation as the “process of integrating an international, intercultural or global dimension into the purpose, functions or delivery of postsecondary education.” This definition clarifies that internationalisation is a much broader, more comprehensive and flexible concept. It recognises and encourages diverse approaches and accepts that there is no one prescriptive formula for all institutions. The context in India is different, and so, the concept of internationalisation should be adapted to the unique challenges and needs of the country. There is no denying that Indian higher education is struggling to infuse quality at the systemic level. Consider the recent case of the 100 per cent cut-off requirement by the Sri Ram College of Commerce, Delhi, for admission to undergraduate programme. Instances like these question the whole premise that Indian higher education is reforming and expanding access to college courses. In reality, the availability of quality institutions is unable to keep pace with demand. Indian institutions are facing a crisis of confidence where many students are aspiring for the same select institutions. A systematic approach to internationalisation may help bring in global good practices and more high-quality institutions. For example, in just a decade, ISB, Hyderabad, has emerged as an inspiration for many other Indian institutions. It is a hallmark of global practices adoption, covering admissions, teaching, research and governance. In a country where absolute scores are still considered the only benchmark for admissions, ISB adopted a holistic admissions process on the lines of the best B-schools by integrating personal interviews and essays. This expanded the choice for many talented students. Unfortunately, regulatory structures had tried to restrict the ISB model and its growth. India is slated to become a top ranking talent provider, globally by 2020, provided it brings about quantitative and qualitative changes in its vocational and doctoral studies curricula. As of now, they are poor cousins to the more lucrative course choices for India’s youth. The two extremes of post-secondary education, vocational and doctoral, are facing acute quantitative and qualitative challenges in attracting talent, delivering value and meeting society’s expectations. Vocational education is impaled on the quantitative front by the large gap between demand and supply. According to the Ministry of Labour and Employment, Government of India, while 12.8mn people are added to the labour force annually, vocational training is available to only a miniscule 4.3mn. On the qualitative scale lies the dismal skill development and training scenario. A report by the World Bank notes that over 60 per cent of graduates from the vocational stream in India remain unemployed even three years after graduation. If vocational training is in shambles, not much can be written about the postdoctoral education system either, struggling with the issues of quality and accessibility. According to the Ministry of Human Resources Development, Government of India, universities enrolled nearly 36,000 students in doctoral programmes in 2005-06—a small number for one of the largest education systems in the world enrolling more than 8.5mn students at the undergraduate level. Despite such a small number, concerns for quality have been growing. Challenges faced by vocational and doctoral education systems in India are complex and dynamic, wherein choices are driven by societal and labour market rewards. Competition for scarce resources and jobs is high. As a result, there is a marked preference for career paths with low risk and high employability. Five major changes proposed at societal, policy and institutional levels, will pave the way for better post-secondary education in India. The Indian post-secondary education system needs to recognise the value of institutional diversity. To quote noted higher education researcher Frans van Vught, member of the Group of Policy Advisors to the President of the European Commission, diversity among institutions is expected to “…better serve the needs of the labour market, offer more and better access to a larger student body and allow institutional specialisation by which the effectiveness of the overall higher education system increases.”