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Last Updated on November 14, 2023 by MBAUniverse.com News Desk

Govt tightens IIM Regulations; President can appoint, remove Chairperson and Directors; IIM Directors must have PhD, first-class degrees at Bachelors and Masters levels

The President of India will now be a "Visitor" at all Indian Institutes of Management (IIMs) and will have the authority to name the chairperson of the board of governors, appoint and remove directors, and dissolve the board for failing to fulfil its duties. The Visitor will also have power to approve annual budgets and determine fees for all IIMs. This development will have significant long-term impact on how 21 IIMs will function as with this notification, Government has issued these clear IIM Director Appointment Guidelines.

Govt tightens IIM Regulations; President can appoint, remove Chairperson and Directors; IIM Directors must have PhD, first-class degrees at Bachelors and Masters levels

As reported by MBAUniverse.com, the IIM (Amendment) Rules 2023, which were brought to amend the IIM Act 2017, were passed in the Parliament in July 2023. Now, the Union ministry of education notified the new rules in a gazetted notification on November 11 specifying the terms and conditions. Let’s examine key provisions of this notification.

Visitor can appoint IIM Chairperson
The Visitor will now have the authority to dissolve the board at any time for three reasons, as per the revised guidelines: if the Visitor thinks the board is not capable of performing its duties; if the board regularly disregards the Act's directives; or if it is in the public interest. Earlier, no such clause for the dissolution of the Board was there. “The Visitor may, by order, dissolve the Board and appoint a person or persons as the Chairperson and members of an interim Board, as the case may be, for such period, not exceeding six months, and direct them to exercise powers and discharge functions under the Act,” the notification stated.

Visitor has final say in appointment IIM Director
According to the new notification, if the Visitor is not satisfied with the nominations received from the board for appointment of a new director, it can make “fresh recommendation” on its own. This implies that Visitor has final say in appointment IIM Director.

“The Visitor shall nominate one of the names recommended by the Board and send the same to the Board for appointment of the person as Director: Provided that where the Visitor is not satisfied with the names recommended by the Board, he or she may ask the Board to make fresh recommendations,” the notification stated. Earlier, the board was solely responsible for the appointment of the Director.

Visitor has power to terminate IIM Director
As per the new notification, the Visitor will now also have the power to terminate the services of the Director. “Notwithstanding anything contained in any of the clauses of this sub-rule, if the Visitor decides that the services of the Director may be terminated or the Director may be relieved from the services of the Institute, the Board shall be bound to follow the decision of the Visitor,” the notification stated.

Under the IIM Act of 2017, the board of governors alone had the power to remove the director with two thirds of the members present and voting and more than 50% of the members of the Board.

IIM Directors must have PhD, first-class Bachelor’s and Master’s degrees
The new guidelines firmly establish the educational qualifications of an IIM Director by replacing “distinguished academic with PhD or equivalent”, with “distinguished academic with first class degree in both Bachelor’s and Master’s level, and with PhD or equivalent from a reputed institute”, according to the notification.

This is for the first time that Government has firmly establish the educational qualifications of an IIM director.

This move is noteworthy because it takes place in the context of the IIM Rohtak case, in which it was found that Prof Dheeraj Sharma, the current director, held a second-class bachelor's degree, despite the government's requirement that candidates hold a first-class bachelor's degree when posting job openings. The Ministry of Education had informed the Punjab and Haryana High Court last year that Sharma had misrepresented his educational qualification.

This notification will have significant long-term impact on how 21 IIMs will function as with this notification, Government has issued these clear IIM Director Appointment Guidelines.

The notification should be seen in the context of a speech by Education Minister Dharmendra Pradhan in Parliament. 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. He shared following reasons for the amendments:

  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.” 

So, will the government go ahead and put the new notification to use, or will the IIM Board and the functionaries take pre-emptive action to avoid the public embarrassment? MBAUniverse.com will keep a close watch on the developments and fallouts of IIM Director Appointment Guidelines...

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