Last week, the Lok Sabha passed a Bill that gives the Centre – among other things – a significant say in the appointment and removal of directors of the Indian Institutes of Management (IIMs).
Called the Indian Institute of Management (Amendment) Bill, 2023, it proposes changes to the IIM Act of 2017, which includes increased presidential powers in the IIMs.
This, however, has prompted experts to ask whether the Bill would maintain the balance between accountability and autonomy of these management institutes in India.
So, what are the amendments that have been made to the IIM Act of 2017? What are the concerns being raised about these changes? The Quint explains.
Changes in Appointment & Removal of Director
The Indian Institute of Management (Amendment) Bill declares all 20 IIMs across the country as 'institutes of national importance' and proposes to regulate their functioning. It also designates the President of India as the visitor of every institute.
This means the President will now have the power to audit the functioning of these institutes, order probes, and hire as well as fire directors. The President is already a visitor at technical premier institutes like IITs and NITs.
Under the IIM Act of 2017, the director of an IIM is appointed by the Board of Governors, based on the recommendations of a search-cum-selection committee. The new Bill, however, mandates that the board must obtain the prior approval of the visitor before appointing an institute director.
Moreover, the procedure for selecting the director will be prescribed by the Centre.
The 2017 Act specified that the search committee would comprise the chairperson of the Board and three members from amongst eminent administrators, industrialists, and educationists. The Bill reduces the number of members from three to two, and adds another member to be nominated by the visitor.
The previous Act also specified that the board could remove the director from office on the grounds of insolvency, mental and physical incapacity, or conflict of interest. But the Bill states that the board will now require the prior approval of the visitor before removing the director.
The Bill also grants the visitor the power to terminate the services of the director.
Functioning of the Board
Under the 2017 Act, the chairperson of the Board of Governors of each institute is also appointed by the board. The Bill amends this provision, too, stating that the chairperson will now be nominated by the visitor.
Additionally, the 2017 Act empowers the board to initiate a probe against an institute if it has not been functioning in accordance with the Act. A retired high court judge conducts such probes. Based on its findings, the board may take any action that it deems fit.
The Bill, however, removes all these provisions and proposes a new procedure for probes, with the visitor holding the power to initiate an investigation.
The visitor may also appoint persons to review the work of any institute and hold a probe into its affairs. Based on the report of such inquiries, the visitor may issue directions, which will be binding on the institute.
The Bill ensures that the Centre may prescribe the conditions and procedure for dissolving or suspending an institute's board. If a board is suspended or dissolved, the Centre will constitute an interim board for six months or until a new board is constituted.
'Bill a Direct Attack on Autonomy'
The Congress has alleged that with the new Bill, the Prime Minister's Office (PMO) "wants to maintain the tightest possible control" and ensure "ideological purity."
"IIMs were given greater autonomy in 2017 and the legislation had wide support in Parliament. But six years later, the Narendra Modi government is undoing what it itself had introduced. Clearly, autonomy is unwelcome for this government," Congress general secretary and MP Jairam Ramesh said.
The Congress leader alleged that the PMO "is setting aside all considerations of quality, freedom of thought and flexibility of administration of programmes."
The IIMs are, meanwhile, concerned that the Bill would dilute their autonomy in the name of accountability.
"This is indeed be a direct attack on the autonomy. The concept of an independent board governing the functioning of a business school is a global model which has been successful everywhere," the director of a top IIM institute told The Quint on the condition of anonymity.
The director added that by introducing the concept of a visitor in IIMs, "the Centre is exercising direct control."
The director said that Bill could lead to increased government control over important appointments, budgetary allocations, and administrative matters.
However, not everyone thinks the Bill would curtail the autonomy of these institutes. Rather, some have argued that the Bill would ensure that these institutes do not transform into private "fiefdoms."
"IIMs are not private but public institutions, answerable to the people of India. They shouldn't transform into private fiefdoms," Atul Kumar, a policy analyst with the Ministry of Skill Development, told The Quint.
Kumar elaborated that in India most private business schools are run as fiefdoms by the founders. "The government should have decision making power on how funds allocated are utilised etc since it is them that are funding these institutes etc. In private institutes, there is no accountability," he added.
What Has the Govt Said?
The Centre has dismissed any concerns about the Bill snatching away the autonomy of these institutes.
Union Education Minister Dharmendra Pradhan, while passing the Bill, said, "We are not interested in taking away the academic autonomy of the IIMs – this is a promise of the government. However, over Rs 6,000 crore has been spent by the state and central governments to set up the IIMs. These institutions are not private property or private institutions. These changes are being brought about simply to bring management accountability."
Jagdambika Pal, a Bharatiya Janata Party (BJP) MP from Uttar Pradesh, said the IIMs had failed to be accountable ever since the government had designated them as institutes of national importance through the 2017 Act.
Pal alleged that as per the 2017 Act, the IIMs are supposed to submit review reports every three years. "With the exception of IIM Bangalore, no other IIM has submitted its performance review over the last five years," he added.
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