New Delhi: In a move, which is being seen as an attempt to dilute the autonomy of the Indian Institutes of Management (IIM) — the country’s premier business schools — the Narendra Modi-led NDA government Friday introduced the IIM (Amendment) Bill, 2023, in Lok Sabha. The bill, if passed, will give power to the President of India to appoint not only the chairperson of the board of governors (BoG) of each IIM, but also appoint as well as remove the director of these institutes.
The bill, piloted by the Ministry of Education, will amend the IIM Act, 2017, which was also brought in by the Modi government and came into force in 2018. It proposes to appoint the President of India as the “Visitor” of every IIM through an insertion of a new section, (10 A), in the principal Act. This will give the central government a say in the decision-making of the IIMs.
The BoG, the principal executive body of the IIMs, regulates the functioning of the institutes. Besides the chairperson, it comprises one nominee of the central government and one nominee of the respective state governments, among others.
Under the IIM Act, 2017, the BoG had the power to appoint the chairman, chosen from among eminent persons distinguished in the field of industry or education or science or technology or management or public administration or such other field.
The bill also gives the Visitor the power to have a final say in the appoint the director of IIMs. This is a major change vis-a-vis the 2017 Act, under which the director, who is the CEO of the Institute, was appointed out of the panel of names recommended by a search-cum-selection committee constituted by the BoG.
The search and selection committee, headed by the chairman of the BoG, will still be there. But in the amended bill, the director will be appointed by the BoG with prior approval of the Visitor.
In another major change, the amended bill has done away with Section 17 of the IIM Act that gave powers to the board to initiate an inquiry in the functioning of an IIM, if required. A retired high court judge was to conduct this inquiry, based on which the board would take the decision.
In the amended bill, the President of India has also been given the power to review the work of the IIMs and subsequently take action if and when required. The bill reads, “The Visitor may appoint one or more persons to review the work and progress of any Institute and to hold inquiries into the affairs thereof and to report thereon in such manner as the Visitor may direct.”
It adds, “Upon receipt of any such report referred to in sub-section (2), the Visitor takes such action and issues such directions as he considers necessary in respect of any of the matters dealt with in the report and the Institute shall be bound to comply with such directions.”
Speaking to ThePrint on condition of anonymity, a director of one of the IIMs, said, the amendment is a reversal of philosophy of the original act.
“The amendments are certainly a change from the original philosophy of the bill, which called for accountability of the board and gave it autonomy. Though internationally the concept of a board has worked, there have been a few instances in IIMs which were concerning. The amendment now stands to make the board directly accountable to the stakeholders, including the government,” he said.
“Although it now calls for direct accountability of the board, it does not solve the challenges that IIMs face,” he added.
Sources told ThePrint that the central government has for some time now felt the need to curtail the powers of BoGs, a move that was being resisted by the IIMs. “Senior officials of the education ministry had meetings in the PMO (Prime Minister’s Office) to discuss the issue,” a source said.
The amended bill is silent on IIMs fees. Under the IIM Act, 2017, they are free to decide their own fee.
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President to appoint chairman of ‘Coordination Forums’
The amended bill also empowers the President to appoint the chairman of the Coordination Forum. This chairman would be an eminent industry personality.
The IIM Act, 2017, mandated the setting up of a coordination forum in which members from every IIM were to be present. Its function is to facilitate the sharing of experiences, ideas and concerns with a view to enhancing the performance of all Institutes and deliberating on matters of common interest of institutes, among others.
The forum is required to meet at least once a year and submit a report on its functions to the central government. It comprises directors of all IIMs and senior officials from the human resource development ministry, including the secretary of higher education.
‘Autonomy has always been a double-edged sword at IIMs’
Speaking to ThePrint, IIM-Bangalore professor Deepak Malghan said, “Autonomy has always been a double-edged sword at IIMs.”
He elaborated on the principal Act of 2017. “The 2017 Act essentially created self-perpetuating boards — an organisation structure with well-known governance issues, amplified by the stagger in director and chairperson terms that engenders mutual back-scratching. IIMs are public institutions, and the self-perpetuating boards have hastened the dilution of the social contract that undergirds any public institution.”
He further said that the new amendments could simply become tools to secure ideological allegiance. “I worry that the new amendments are more about securing ideological fidelity. Such demand for ideological allegiance predates the current dispensation. However, the current government differs from its predecessors in that ideological fidelity trumps any genuine academic consideration in things like the appointment of institutional leaders.”
Malghan went on to say that even before this amendment, the last few director appointments at IIMs have shown “how ideological fidelity to the Hindutva agenda is a (perhaps even the) prime consideration”.
He added: “The nominally independent boards have been unable to stand up to this ideological onslaught for three reasons. First, these boards are headed by industry captains with little understanding of a public university’s mission. Second, the genuflection of the Indian corporate sector in the last decade has been shameful. ‘I will crawl when asked to bend’ capitulation rubs off on how IIM boards have been unable to stand up to government bullying.”
The third factor, said Malghan, is that IIM faculty members “have used autonomy for self-aggrandizement that will not stand public scrutiny”.
“This further compromises the ability of IIMs to exercise their independence as public institutions,” added the UK-born professor of public policy and ecological economics.
New IIM In Mumbai
The amended bill has also renamed the National Institute of Industrial Engineering (NIIE), Mumbai, to ‘Indian Institute of Management, Mumbai’. The NIIE has been allocated Rs 65 crore as grants-in-aid for the financial year 2022-23. It shall be provided a grant-in-aid of Rs 80 crore for a period of one year after becoming IIM, Mumbai, the bill states.
There are currently 20 IIMs in the country, seven of which are first generation IIMs. These include Ahmedabad, Bangalore, Calcutta, Lucknow, Indore, Kozhikode, Shillong.
The second-generation IIMs include Rohtak, Raipur, Ranchi, Tiruchipalli, Kashipur and Udaipur.
Amritsar, Bodhgaya, Jammu, Nagpur, Sambalpur, Sirmour and Visakhapatnam are the third-generation IIMs.
This year, the ministry of education cut the funding of the IIMs by half to Rs 300 crore from the previous fiscal year’s Revised Estimate (RE) of Rs 608.23 crore, a 50.67 per cent drop. While this does not impact the first- and second-generation IIMs, it stands to impact the third generation IIMs established in the last 10 years.
The Ministry had previously, in 2018, stopped the funding of the second-generation IITs which were formed under the UPA government in 2008-09. Having allocated the IIMs Rs 333 crore each for building their permanent campuses, the government now wants them to meet any additional funding through their own resources or by way of loans.
This is an updated version of the report.
(Edited by Zinnia Ray Chaudhuri)
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