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In mid-January, prominent alumni of the Indian Institutes of Technology gathered to celebrate the 50th anniversary of their alma mater. The first of India's seven IITs was set up in 1953, in the eastern Indian city of Kharagpur. The keynote speaker at the celebration was Microsoft chairman Bill Gates, who called the IITs "an incredible institution" from whose traditions "the computer industry has benefited greatly." Unusually, the celebration was not held in Kharagpur or even New Delhi, but in Silicon Valley.

This wasn't surprising: Over these 50 years, some 25,000 IIT alumni have made their home in the United States, not in India. They have burnished India's reputation and enriched the global economy. They have maintained high standards and their alumni have become CEOs of the world's leading corporations. But critics argue this is made possible by generous support from the Indian government, which has diverted resources to the IITs at the cost of primary education. As the Indian government seeks to multiply the magic by increasing the number of IITs to 10, it must ensure that quality is not sacrificed at the altar of quantity. And to do that, it needs to reassess the way the IITs are managed so that they continue to remain the great asset they are for India and the world.

Enriching the global economy was not the original intent behind setting up the IITs. When Jawaharlal Nehru inaugurated the IIT in Kharagpur, his dream was different: to establish first-rate engineering schools that would aid India's development. Nehru wanted Indians to cultivate a scientific temper, and the IITs were meant to produce skilled engineers. who'd build what he called the temples of modern India -- its dams and power stations, its petrochemical industries and heavy engineering plants.

To achieve this, the IITs were to become elite institutions, with the freedom to choose whom to teach, who would teach and what to teach. Full budgetary support was guaranteed. Flush with resources, the IITs became islands of excellence by not allowing the general debasement of the Indian system to lower their exacting standards. You couldn't bribe your way to get into an IIT; the selection process remains extremely difficult. Candidates are accepted only if they pass a grueling entrance exam. The government does not interfere with the curriculum, and the workload is demanding. The austere environment provides few distractions.

Arguably, it is harder to get into an IIT than into Harvard or the Massachusetts Institute of Technology. Top American universities typically accept 10% of applicants; of the 178,000 highly motivated kids who apply each year for admission to the seven IITs, barely 2% make it. In a recent episode of the American news program, 60 Minutes, the show's host Leslie Stahl said: "Put Harvard, MIT and Princeton together, and you begin to get an idea of the status of this school in India." In the same program, IIT alumnus Vinod Khosla, who co-founded Sun Microsystems, said: "When I finished IIT Delhi and went to Carnegie-Mellon for my Master's, I thought I was cruising all the way because it was so easy relative to the education I had got at IIT."

And that's the heart of the dilemma. For some argue that the benefit goes to the world at the cost of India. Like Mr. Khosla, many graduates went abroad, and many never returned. Until the 1970s, about a third of IIT grads settled abroad, filling the campuses of American universities, hi-tech firms, labs and, later, boardrooms of large companies. Inspired by them, today close to half of the graduating class goes abroad.

This emigration of talent has caused resentment in India. Newspaper editorials and politicians periodically fulminate against the brain drain. It took the enlightened bureaucrat, N. Vittal, who spearheaded the marketing of India's information technology skills after 1991, to challenge this notion. "Brain drain is better than brain in the drain," he said, arguing that Indian engineering talent overseas was a long-term blessing for India, not a curse. He pointed out how companies like Texas Instruments decided to locate in Bangalore in the mid-1980s after they discovered that a large part of their research staff came from Indian engineering institutes. Why not go to the source, they reckoned, and TI became a trailblazer, "discovering" Bangalore, leading other companies to follow, transforming the somnolent, pleasant haven of retirees into India's "Silicon Plateau."

It is impossible to quantify the value of Indian engineering talent as a brand. India's software reputation is built on the respect Indian engineers command world-wide. Many IIT grads have taken up management functions, often ending up in positions of making critical investment decisions, which can go India's way, if India's investment environment remains open.

It is not easy to quantify such benefits. But it is possible to quantify the costs. Education at the IITs remains highly subsidized. Up to 1991, the annual tuition was ridiculously low, at 250 rupees ($10 at the 1991 exchange rate, and $5 at today's). Tuition has now risen to 22,000 rupees ($440) a year. Tuition at elite American engineering schools can be 40-50 times higher. If India subsidizes such high-quality education, and if nearly half the graduates leave India, never to return, is India getting a good return? Enthusiasm for globalization apart, it is a fair question.

Last year, India's budget for the seven IITs was $112.8 million, compared with $715.4 million it had allocated for primary education. On a per-capita basis, that is lop-sided. India's literacy rate is low. Indian planners know the long-term benefits of primary education for girls (improved health and lower fertility rates). Many schools in rural India lack even buildings and blackboards. At such a time, should India lavish its rupees on elite engineering schools, whose benefits go to Western corporations?

This need not be seen in narrow nationalist terms. Nobody denies that India should spend more on primary education. But that money does not have to come at the cost of the IITs. If India wants to, there are many unproductive areas in the Indian economy where it can generate savings, like selling off businesses the government should not be running, eliminating subsidies going to the farm sector and levying income tax on wealthy farmers.

Being world class universities, the IITs need to be managed as such. This includes paying faculty internationally competitive rates, rather than be restricted by government wage scales and labor policies. And the government should resist the temptation of quantity. For 40 years, India did well with five IITs. Now there are seven, and talk of 10. Plans include significantly increasing the intake of students. Quantity at the cost of quality will sound the death-knell of the IITs.

Nehru wanted the IITs to benefit India. Instead, they ended up benefiting the world. Now that India has taken steps to integrate its economy with the rest of the world, it will reap tangible benefits from this exceptionally talented part of its diaspora. When the first IIT grads left India, they did so because the rest of India was not as competitive as they were, and the opportunities it offered were not as challenging as what they were trained for. In the next 50 years, it is for India to catch up with its IITs. That will be an achievement beyond Nehru's wildest dreams.

Mr. Tripathi writes from London.

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