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The HRD ministry’s attempt to wrest control of the IIMs comes in for much criticism. Will the government relent or go ahead with its “takeover” plan?

By Ajith Pillai

No Bible on management would recommend that an institution or business give up its independent decision-making pro-cess and allow itself to be micromanaged by the government. The controversial Draft Indian Institutes of Management (IIM) Bill, 2015, to be put up for parliament’s approval later this month, threatens to do just that—wrest autonomy from 13 premier management institutions across the country and bring them under the government’s oversight.

While recent press reports seem to suggest that the Union HRD Ministry piloting the legislation may suitably “tweak” it to accommodate the concerns of the various IIMs, officials of the ministry have indicated
to India Legal that no major changes are expected. So, unless there is intervention from the very top (read the prime minister) or if the cabinet does not give its approval, the legislation in its current form could well come up before parliament for approval during the monsoon session which begins on July 21.

Many in the top echelons of the IIMs see red at the prospect of the Bill getting the Parliamentary nod. In that event, they fear that the very character of the management institutes will be drastically altered and brand IIM’s credibility, built over the years, will slowly but surely take a hit. In fact, such is the concern that several objections have been raised against the proposed legislation in the last few weeks. According to former and serving faculty members, the government securing complete control over the IIMs would directly impact the independent functioning of the institutes.

Professor Pankaj Chandra, former director, IIM-Bangalore, who had advised the UPA government during the first draft of the Bill, told India Legal: “The Bill is not what was agreed upon when we submitted our suggestions in 2013 after much deliberation. This is a revised version which incorporates all that we had objected to. In its current form it will bring in several levels of government interference in the functioning of the IIMs. In fact, under certain provisions of the proposed Bill, virtually every decision will require government approval. That is not how centres of excellence are run anywhere in the world.”

British Prime Minister David Cameron  interacting with  IIM-Calcutta students  during his India visit in November 2013
British Prime Minister David Cameron interacting with IIM-Calcutta studentsduring his India visit in November 2013

This is as much the gist of what AM Naik, chairman of IIM-Ahmedabad Board of Governors, told reporters last month. He had pointed out that the independent functioning of the IIMs would be severely circumscribed if the Bill is implemented. “Our prime minister wishes to create world-class academic institutions, but this kind of regulation only pushes us in the opposite direction,” he had said. Naik also wrote to Union HRD Minister Smriti Irani on June 24, expressing the concerns of IIMs.

“Post 1996, we came to understand that dialogue was important and much better than the gun. It was a masterstroke of Narasimha Rao to revive the democratic process.”

To quote from his note to the minister: “On behalf of the Indian Institute of Management Ahmedabad  (IIM-A), I would like to convey our deep reservations on the proposed IIM Bill that has been put up for public comments…. On a preliminary review of the Draft IIM Bill 2015, we are deeply concerned that some of the provisions of the Bill would seriously compromise the autonomy of the institute. We believe that developing a Bill that helps us achieve its vision requires a thorough and collaborative review process which needs adequate time and deliberation….”
Similar objections have been communicated to the ministry by some other IIMs, including Bangalore, Calcutta and Lucknow.

According to IIM insiders, the new Bill, circulated two months ago by the HRD ministry took everyone by surprise. It was a clear departure from the Draft Bill discussed and agreed upon by the IIMs two years ago. In its new avatar the Draft Bill had all the sticking points that the institutes had earlier objected to. Naik articulated his frustration to the media: “After nine months of silence, the government suddenly floated this new draft, which we saw just a few weeks back. It really caught us by surprise. The original Bill, which was approved by the IIMs and Ministry of HRD, has been completely changed, and rather made even worse than the original draft.”

Those who have objected to the Bill have taken particular umbrage over three sections of the new Bill which render the board of governors of the IIMs virtually powerless and toothless. Should the new legislation be passed, all its decisions relating to admissions, courses run, fee structure, establishment of new buildings, fellowships and scholarships will have to be cleared by the HRD Ministry. The appointment of chairpersons and directors of the IIM boards will also be finalized by the government.


“The Bill is not what was agreed upon when we submitted our suggestions in 2013 after much deliberation. This is a revised version which incorporates all that we had objected to.” — Prof Pankaj Chandra, former director, IIM-B

Not just that, each IIM director must give their assessment on the performance and contribution of the five highest paid employees in the institute to the HRD Ministry. A senior faculty member of the IIM Lucknow says: “Every aspect of functioning has been covered by the Bill. It wrests total control with the government, reducing the IIMs to mere operating centres which will have to obey the diktats of the HRD Ministry in Delhi.”

Those who support the Bill point out that IIMs, though registered under the Indian Societies Registration Act, were created by the government in 1961 and are also funded by it. The institutes enjoyed day-to-day autonomy in their functioning till now although under the watch of the government which has been formulating broad policies for each of the IIMs. But this approach had to change with the number of institutes increasing from 3 to 13 and with 6 more on the anvil. The autonomy had to be codified by law and the role of the government defined. Also, since government funding is involved, accountability had to be formalised and a uniform system had to be put in place to cover areas like appointments.

According to the government, the big takeaway for the IIMs as well as its students is that once the Bill becomes operational it will pave the way for these institutes to confer degrees instead of post-graduate diplomas that they currently award. This will not only attract foreign students to these B-schools but will help the institutes to set up campuses abroad for which a degree programme is essential. In short, the argument is that the Bill will only strengthen and help the IIMs grow.

But those opposed to the proposed legislation say that the degree is just a carrot offered by the government. According to Prof Chandra, if the Bill was all about giving IIMs the authority to grant degrees, why not focus on that and not on wresting control over the institutes.

He says: “If it was all about a degree then why not have a Bill that just says that and nothing else. In any case, even without a degree the IIM is accepted across the world for its excellence. The real intent of the Bill is to facilitate the government takeover of the IIMs. If that happens then I fear that the IIMs will get bogged down by political and bureaucratic interference.”

Meanwhile, over 400 private B-Schools which offer post-graduate diploma courses in business management have also expressed their apprehensions over the proposed Bill. They fear that the courses they run will lose their grading if the IIMs begin to confer degrees.

Demanding a level-playing field, their plea is that a competent national body be constituted which will recognise private institutes and give them the authority to confer post-graduate management degrees like the IIMs.
It’s been 10 years since the idea of a Bill to cover IIMs first started doing the rounds. It has courted controversy even since. As the Draft Bill awaits Cabinet approval, the HRD ministry still has time to make the proposed legislation a palatable one for all stakeholders. Otherwise, as JJ Irani, Chairman of the IIM-Lucknow Board, told the media: “There will be a revolt in the IIM system.”

Such seething discontent is the last thing one would want in the faculty of one of India’s premier management institutes.­

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