IIMs built with Public money, must not become private properties, Education Minister Dharmendra Pradhan on what forced Modi Government to introduce IIM (Amendment) Bill 2023

Latest Update:

• On August 8, Rajya Sabha passed the IIM (Amendment) Bill, 2023. Now heads to President for approval
• IIM (Amendment) Bill, 2023 passed in Lok Sabha on August 4, 2023
• IIM Bill 2023 to be presented in Rajya Sabha for passage soon
• According to media reports, a few IIM Directors and Board Members were not in favour of Amendments
• Union Education Minister Dharmendra Pradhan defended the Bill in Parliament. He said it will not take way the Academic Autonomy of IIMs, but ensure Accountability of IIM Board towards the Public Good
• MBAUniverse.com presents key provisions of IIM Bill 2023, What Forced the Government to introduce this Bill, and the likely impact

IIM (Amendment) Bill 2023 was cleared by Lok Sabha on August 4, and will be presented in Rajya Sabha for clearance soon. Then, it will be sent for President’s nod to make it a legislature. What is the IIM Act Amendment Bill 2023? Will IIM Act Amendment Bill 2023 dilute the Autonomy of IIMs? What forced the Modi Government to introduce this Bill? And what are the implications of the IIM Bill 2023? These are the questions on the minds of all stakeholders of Indian Management Education. MBAUniverse.com presents the complete background and all sides of this debate. This page will be frequently updated as the discussions move forward, so bookmark this page.

Education Minister Dharmendra Pradhan spells out in Parliament why Modi Government amended IIM Act 2017 through IIM (Amendment) Bill 2023
In his short but candid speech in the Parliament on August 4, Education Minister Dharmendra Pradhan spelled out why Modi Government decided to amended IIM Act 2017 through IIM (Amendment) Bill 2023.

Sharing the reasons for the amendments, he made following points:

1. IIMs should follow IIT, NIT Model of Governance: Education Minister Dharmendra Pradhan said that IIMs should follow IIT, NIT Model of Governance. He said: “The President of India is the Visitor to all the other top-ranking institutes, including the IITs, IISERS and the NITs. Never has a question been raised on the academic autonomy of these institutions.”
2. Government not interested in controlling the Academic Autonomy of IIMs: Education Minister assuaged the fears in a section of academics, when he said: “I will like to assure the Parliament that we don’t have any intention of interfering with the academic autonomy of IIMs.”
3. Government concerned about Non-Compliance by IIMs to Constitutional Obligations: Sharing the rationale for making these amendments, Education Minister Pradhan said: “Over the past three-four years, it has been observed that IIM Boards did not comply with several constitutional obligations such as providing reservations to backward categories during the appointment of teachers or being accountable to the government’s GFRs (General Financial Rules) as well as its service conduct rules.”
4. Amendments to ensure Accountability of IIM Board as Public Institutions: In a direct message to the Board of IIMs, Minister Pradhan said that IIMs are public institutions built by public money, and must remain accountable to the public. “IIMs have been built by more than Rs 6000 crores of public money. They must not become private properties.” 

Pradhan also said that it was the Modi Government that introduced the 2017 IIM Act, which came into force in January 2018, empowered the IIMs to grant degrees for various courses after attaining the status of Institute of National Importance. Till then, IIMs could only offer diploma and certificate courses, not Degrees and PhDs.

The Context: Indian Institute of Management Act, 2017
To understand the present developments better, let’s go back a few years. The Indian Institute of Management Act, 2017, approved by the Union Cabinet on January 24, 2017, designated the Indian Institutes of Management (IIMs) as institutions of national importance. It empowers them to offer degrees and introduces significant changes to their administration. After receiving the President's assent, the bill became an Act on December 31, 2017. The Act established the Board of Governors as the principal executive body for each IIM. The board was empowered to appoint Director for each IIM. Additionally, the Act creates an Academic Council for each IIM, which acts as the principal academic body.

The 2017 legislation for Indian Institutes of Management (IIMs) demonstrated a remarkable act of restraint by the government, granting the IIMs greater autonomy by leaving key appointments such as the chairperson, board members, director to the Board of Governors (BoG). The government's direct involvement was reduced from four members to two, empowering the BoG and increasing the institutes' independence in governance and decision-making.

What is IIM Bill 2023?
So, what is IIM Bill 2023? What are its key provisions. IIM Bill 2023 comes six years after the IIM Act, 2017 was implemented. It amends the 2017 Act, seeking to limit the autonomy the premium B-schools enjoyed so far. Purpose of IIM Bill 2023 is:

• To Regulate the IIMs: The Bill amends the Indian Institutes of Management Act, 2017. The Act declares Indian Institutes of Management (IIMs) as institutes of national importance and regulates their functioning.  
• To Convert NITIE to IIM Mumbai. The Bill classifies the National Institute of Industrial Engineering (NITIE), Mumbai as IIM, Mumbai. As IIM Mumbai, this will be the 21^st IIM in India. 

Salient Points of IIM Bill 2023

• President of India as Visitor to All IIMs: The Bill designates the President of India as the Visitor for all IIMs, granting them this prestigious position.
• Appointment of IIM Directors: The Bill amends the appointment process for IIM Directors, requiring the Board of Governors to obtain prior approval from the Visitor before making the appointment. The Search-cum-Selection Committee will now consist of the Chairperson of the Board and two members nominated by the Visitor.
• Removal of IIM Directors: The Bill grants the Visitor the authority to approve the removal of an IIM Director, in addition to providing the power to terminate their services as prescribed.
• Appointment of the Chairperson of the Board of Governors: The Bill changes the appointment process for the Chairperson of the Board, with the Visitor now nominating the individual.
• Inquiries against IIMs: The Bill replaces the Board's power to conduct inquiries with the Visitor being empowered to initiate and conduct inquiries into any Institute's affairs. The Visitor's directions resulting from such inquiries will be binding on the Institute.
• Dissolution of the Board: The Bill allows the central government to prescribe conditions and procedures for dissolving or suspending an Institute's Board, with an interim board being constituted if needed.
• Co-ordination Forum: The Bill modifies the Co-ordination Forum by having the Visitor nominating the Chairperson instead of selecting them through a Search-cum-Selection Committee. It also includes all Institute Chairpersons as ex-officio members.

Why Government decided to amend IIM Bill 2017 to this 2023 Bill?
It is important to note that there were several occasions since the passage of IIM Act 2017 when the Education Ministry and IIMs did not see an eye to eye. MBAUniverse.com recounts a few key instance:

• Tussle between Ministry and IIMs over One-year Executive MBA Degrees:  
  In early 2020, top management schools faced conflict with the Centre regarding the award of one-year executive MBA degrees. The Centre raised concerns, citing University Grants Commission (UGC) rules, which did not allow the granting of degrees for courses with a duration of one year. Despite several meetings between the IIM heads and the government to discuss the issue, the institutes continued to award one-year degrees, defying the government's reservations.
• Disagreement with IIM Rohtak over Director’s Appointment: Dr. Dheeraj Sharma, the Director of Indian Institute of Management (IIM) Rohtak, was re-appointed in 2022 for a second term as the head of the business school, despite objections from the Narendra Modi government. The Union Ministry of Education sent him a show-cause notice, alleging that he concealed his actual qualifications. Dr Sharma has been under scrutiny for discrepancies in his educational qualifications and lack of supporting documents. However, as per IIM Act 2017, IMs have the autonomy to appoint their directors, and the institute's Board of Governors decided to reappoint Sharma for a fresh term despite the ministry's concerns.
• Former IIM Calcutta Director’s Face-off with Faculty: On 22nd March 2021, Anju Seth, the Director of Indian Institute of Management, Calcutta (IIM-C), resigned from her position a few weeks after the board initiated a search for a new director. Her term was expected to end in February 2022. The resignation followed allegations of centralizing powers and improper conduct levelled against her by a significant number of faculty members.
• Disagreement in IIM Ahmedabad on Change of Logo: In 2022, a group of faculty members at IIM-Ahmedabad expressed opposition to a proposal to change the institute's iconic logo, citing potential negative effects on the institute's brand and stakeholders. The proposal, which was approved at a recent IIMA Board meeting, has drawn criticism from both current and former faculty members. The existing logo, inspired by the lattice work of the Siddi Saiyyed Mosque in Ahmedabad was chosen by Dr. Vikram Sarabhai.

There were several other instances which led to the current amendments.

Is IIM Act Amendment Bill 2023 a right step for IIMs?
While most media reports highlight that some IIM Directors, current and former, believe that this is a regressive step, there are counterpoints too. Let’s review key arguments for and against this Bill.

Dr Bakul Dholakia, Former IIMA Director told The Print that the “IIMs were unable to make the best use of the autonomy given to them by the IIM Act, 2017, and failed to improve their research output, global rankings or their stature in the eyes of the corporates.” This led the Government to introduce the amended IIM Bill 2023.

Prof TT Ram Mohan, IIM Ahmedabad faculty has written a hard-hitting column in The Hindu on in favour of the IIM Bill 2023 calling it a Bold move by the Government. “No public institution can be exempt from the principle of democratic accountability. And accountability to government and Parliament is preferable to no accountability at all,” he wrote.

Without naming the sources, some other media reports say that the Directors of IIMs are unhappy with the introduction of IIM Bill 2023. Directors fear loss of autonomy and control.

IIM Raipur Director Ram Kumar Kakani has supported the move and has said, “The proposed legislation intends to bestow extra obligations on to the Hon’ble President of India, one of which will be to serve as a visitor at all Indian Institutes of Management. This is a welcome step aiming to improve supervision and accountability, both of which are essential components of effective institutional governance. We hope that this new amendment supports the Indian Institute of Management’s sustained expansion and outstanding performance.”

What are the implications of the IIM Bill 2023
To be updated soon.

Implications of IIM Bill 2023
Here are the likely implications of the passage of IIM Amendment Bill 2023:

1. More Accountability of IIMs towards National Education Policy and General Financial Rules
2. More Accountability of IIMs towards Public Good
3. Government Supervision and Involvement in appointment of IIM Directors
4. Government may intervene  to remove IIM Director as Bill grants the Visitor the authority to approve the removal of an IIM Director
5. Greater Coordination amongst IIMs through Coordination Forum

Stay tuned to MBAUniverse.com for more updates on this developing story.