An MBA at IIMA could cost Rs 1 crore in 20 years, says Infosys founder Narayana Murthy on new merit scholarship

Infosys founder NR Narayana Murthy (left) and MD Ranganath, chairman of Catamaran Ventures (right).

Infosys founder NR Narayana Murthy has established a long-term, inflation-adjusted merit scholarship at the Indian Institute of Management Ahmedabad (IIMA), aimed at fully funding the education of top-performing students.

The annual award will go to the first-year student with the highest cumulative grade point average in the Post Graduate Programme, covering tuition, accommodation, course materials, and living expenses. Murthy has pledged to support the initiative for 20 years, with total funding estimated at ₹12 crore.

Murthy’s association with IIMA spans decades-he served as chief systems engineer early in his career and later chaired the institute’s board of governors.

In an interview with Moneycontrol, Murthy and MD Ranganath, chairman of Catamaran Ventures, discussed the rising cost of an MBA, the constraints on funding in Indian higher education, and the future of software jobs in an AI-driven economy.

EDITED EXCERPTS:

Before we get into the scholarship, Mr. Murthy and Ranga, let me talk about your own ties to IIM-A. Mr. Murthy, IIMA was your first job after your M.Tech. You joined IIMA as the Chief Systems Engineer. And Ranga, you graduated from the Indian Institute of Management Ahmedabad.

Narayana Murthy: My boss Professor J.G. Krishnayya, whose 90th year we celebrated in March, is an extraordinary individual. He was one person who was always ahead of the pack — in his ideas, in his imagination, in his innovation, etc. Second, I learnt a lot from him. I would say I used so many of the principles that I learnt from him — by his action — and I used them at Infosys. So, I owe a lot to him for wherever I am today.

For example, he was the person who taught me the principle of starting every transaction on a zero base and not carrying on the bias from prior transactions. Second, he taught me the importance of using data and facts to judge every transaction. That's how I created the sentence: "In God I trust, everybody else brings data to the table."

He benchmarked himself with the best global business schools. That’s how he brought to IIMA a time-sharing system, which did not exist in India at that point of time — not in TIFR, not in any IIT, not in IISc — nothing. It was at IIMA. Why? Because he found that Harvard Business School had a time-sharing system. Stanford had a time-sharing system. He said, "I want to be the third business school in the world."

So therefore, I learnt a lot — in high aspirations, in global benchmarking, in working in a team, in being fair, etc. So, I thought I would do something to show my gratitude to him.

Now, there’s also another important issue that we should remember. There were multiple choices for us. One was to say, we’ll give the money to IIMA and then see what happens. But I had a not very positive experience when I did that in the past. For example, my wife — she's from Indian Institute of Science. She wanted to give shares worth Rs 5 crores approximately — maybe Rs 4.5 to 5 crores — in the middle 90s.

Unfortunately, the government did not give permission. Just to give you a data point — if they had kept those shares, today those shares would be worth approximately Rs 4,000 crores.

Even more interesting is the fact that with a dividend yield of approximately 2.8 to 3 percent of Infosys, every year IISc would have gotten between Rs 110 and 120 crores of dividend — at least for the last 5 to 8 years.

Same thing with IIT Kanpur. I gave about Rs 8 crores to IIT Kanpur towards late 90s, and I once again requested the then director to take it up with the government — central government. The Central government said no. After that, while in the case of IISc we have had bonus shares equivalent to 768 times what we gave, in the case of IIT Kanpur, it is 256 times.

So, what I gave at that time was Rs 8 crores — it would have been today Rs 2,000 crores. Number two, their dividend would have been about Rs 60 crores every year. In the last 8 years, the dividend itself would have been Rs 500 crores.

So, the two reasons why I am participating in this conversation: It is to honor the past and encourage the future. That is the first thing. That is, create a scholarship purely based on merit for the top student of first year, so that all his or her expenses are fully covered for two years at IIM Ahmedabad. And this scholarship is for 20 years.

Second, to not burden those institutions with less-than-acceptable income because of the various laws that prevail in the country. So I said, let us manage that fund, and let us ensure that for the next 20 years, the top-ranking student from IIM Ahmedabad gets all his or her expenses covered — including tuition fee, hostel fee, mess charges, books, everything.

Ranga, tell us a bit about this scholarship. Mr. Murthy mentioned the constraints that were there in terms of giving shares, which is why this had to be structured differently. So, he brought up the aspects of the scholarship — 20-year inflation-adjusted — which will go to the top-ranking student of the first-year PG batch, right, where everything will be covered from hostel to books and other miscellaneous expenses. How are you administering this from Catamaran? I read a figure somewhere that said over 20 years, this will come up to ₹12 crore, with about ₹36 lakh per year.

MD Ranganath: First, I'm very excited because this relates to my alma mater. And more importantly, as Mr. Murthy said, it also celebrates excellence. And I think all the institutes have very compelling needs for funds — for infrastructure, for labs, etc. In a small way, we're also saying that, look, how can this help in the ability to attract and recognize top talent in those institutes.

Coming to another exciting part of this area, we are going to manage this, and we're going to commit, as you said, over 20 years. I would call it inflation-protected rather than adjusted. So, one of the things we did was look over the last 20 years: what has been the inflation of the IIM’s total fees and expenses for the students? We looked at the last 20 years’ data and what is the inflation built in there.

We came up saying that, look, what is the right mix of debt and equity that we could do? So, we devised a mechanism where a combination of fixed income and debt and equity. Equity — we said, look, we are not going to invest in individual stocks. We chose the index. So, roughly about two-thirds of debt and one-third of index investments — a combination — we worked out, which will yield enough or generate enough income to make sure that over the next 20 years, we do not fall short of our commitment.

Narayana Murthy: You know, just to give you an idea of how inflation is going to impact — this year, I think they're going to give them ₹28 lakhs.

₹28 lakhs for the two years, including all expenses. In another 20 years, it'll be ₹1 crore.

So, the cost of studying two years at IIMA, with the current inflation rate, is likely to be ₹1 crore. You know, what that also means is that, in some way, we may be shutting off the poorer sections of society from enjoying this excellent education that Mr. Rangnath went through. That is the way I wanted to talk about — if whatever 400 corporations or 400 individuals in India were to do what we're doing, then every student there could get free education. But merit must be the criterion. So therefore, since I was doing it for one, we said we’d give it to the top-ranking student who is in the PGP-1.

What do you think about the role of management graduates in an AI-first world?

Narayana Murthy: AI is primarily a technological marvel. It is all about improving productivity. It is all about solving problems that are beyond human effort.

I do not see any difference between a management graduate and a technology graduate because they attack the problem at different levels. One asks "what," while the other focuses on "how." Technical people look at "how," and the management graduates look at "what." So, both are needed. And given that these are some of the brightest people that we have in the country, I am very, very positive.

As things stand, how do you see AI impacting jobs in India, impacting the IT services sector, which is still the biggest private sector employer in the country, and we have millions of engineering graduates every year who find a home in IT. Are you optimistic, pessimistic—what’s your state of mind right now with respect to the impact of AI, the second-order impact of AI on India?

Narayana Murthy: If we were to use AI as an assistive agent to improve our productivity, to make our life easier, we’ll all be great winners. One of the important factors that every software company—Indian software services company—worries about is work productivity. My own experience with AI, with ChatGPT, etc., is that you can improve work productivity hugely.

In the last six months, I have been using ChatGPT to prepare the draft of my lecture. Earlier, I used to take about 25 to 30 hours to prepare a lecture.

When I started using ChatGPT-4, I found that in a matter of 5 hours, I could improve the draft. In other words, I improved my own productivity by as much as 5 times. So, there is a huge opportunity in the software services companies if they were to use AI to create models — or what we technically used to call skeletons (of programs).

AI, ChatGPT — those technologies provide us the ability to produce high-quality skeletons based on what they are doing right now. And I can assure you, once the skeletons are produced by AI, then it becomes extremely easy for the mass programmer to produce high-quality code, high-quality programs. Therefore, the error rate is much lower, and the work productivity is much higher. And that is it. So, I think the Indian software industry will accelerate its growth if the leaders were to use AI in an assistive manner and look at how to improve productivity and quality.

Will they still need to hire so many people?

Narayana Murthy: Everybody said when computers came to the banking sector, “No, no, no, jobs will go away.” No — jobs have multiplied by a factor of 40 to 50 in the banking sector.

So, this whole fear that technology will take away jobs is not right. It will create a different kind of job. For example, what I found in using ChatGPT for my speeches was the following: the smartness is in providing the requirement definition for my speech. The smartness is in asking the right question.

So, what will happen in the future is our programmers and analysts will become smarter and smarter in defining better and better requirements — more complex requirements. They will solve bigger problems, more complex problems. So, I am very positive about how AI will only enhance the growth rate of our industry.