Govt’s Bill on IIMs, and the concerns over their autonomy

What is the purpose of the IIM Bill amendment?

The Bill seeks to amend the Indian Institutes of Management Act, 2017 which declared 20 existing IIMs as “institutions of national importance with a view to empower these institutions to attain standards of global excellence in management, management research and allied areas of knowledge”.

Under the 2017 Act, the Director of an IIM is appointed by a Board of Governors, and the government has a limited say in the process. The proposed amendments essentially seek to alter this situation, and to give the government an expanded role in the appointment of the IIM Director.

How is this change proposed to be effected?

Section 5 of the amendment Bill says that “After section 10 of the principal Act, the following section shall be inserted, namely:— ’10A. (1) The President of India shall be the Visitor of every Institute’” covered under the IIM Act.

The Bill prescribes three primary roles for the Visitor: to make appointments, to audit the working of institutions, and to conduct an inquiry.

What is the current process of appointment of the Director?

Section 16(2) of the 2017 Act says “the Director shall be appointed by the Board, on such terms and conditions of service as may be prescribed.” Section 16(1) says the “Director shall be the Chief Executive Officer of the Institute and shall provide leadership to the Institute and be responsible for implementation of the decisions of the Board”.

Section 16(3) says “the Director shall be appointed out of the panel of names recommended by a search-cum-selection committee to be constituted by the Board”.

The Board chairperson will head the search-cum-selection committee, which will also have “three members chosen from amongst eminent administrators, industrialists, educationists, scientists, technocrats and management specialists”.

And how does the Bill seek to change this process?

The Bill requires the Board to obtain prior approval of the President before appointing a Director.

Thus, in Section 16(2) of the 2017 Act, which deals with the appointment of the Director, it is proposed to replace the words “appointed by the Board, on such terms” with the words “appointed by the Board with prior approval of the Visitor, in such manner and subject to such terms”.

Since the actions of the President are on the aid and advice of the Union Council of Ministers, this change essentially means the Ministry of Education can veto the choice of the Board.

The proposed amendments seek to give the government a say in the initial selection process as well.

Thus, the four-member search-cum-selection committee described in Section 16(3) is proposed to have, apart from the chairperson of the Board, “one Member to be nominated by the Visitor”, and only two other “eminent” members.

Under the proposed amendments, the Board will be required to obtain prior approval of the Visitor to remove the Director as well.

Section 16(7) of the existing Act describes the circumstances in which “the Board may remove from office… [a] Director”. The Bill has proposed the replacement of these words with the words “The Board, with prior approval of the Visitor, may remove from office the Director…”.

Also, the Bill has proposed that “after sub-section (9) [of Section 16], the following sub-section shall be inserted, namely:— “(10) The services of the Director may be terminated by the Visitor, in such manner as may be prescribed.”.

What about the appointment of the chairperson of the Board?

The Bill seeks to take away the power of appointment of the Chairperson from the Board, and to instead make the Chairperson a nominee of the President.

Section 10(2)(a) of the existing (2017) Act says the Board of each Institute shall have “a Chairperson from amongst eminent persons distinguished in the field of industrial education or science or technology or management or public administration or such other field, to be appointed by the Board”.

The amendment Bill says that in Section 10(2)(a), the words “to be appointed by the Board” shall be replaced by the words “to be nominated by the Visitor”.

What powers of audit and inquiry does the Bill envisage for the Visitor?

It is proposed that “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.”

Based on these reports, “the Visitor may take such action and issue 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”.

What is the upshot of all this with regard to the autonomy of IIMs?

The Bill represents the government’s rethink on the autonomy of IIMs. Over the last four years, the government and the IIMs have been at loggerheads on several key appointments.

For example, the Director of IIM Rohtak, Dheeraj Sharma, was given a second term by the institute’s Board of Governors despite objections from the government.

The government had cleared the appointment for the first term in February 2017, but had objected to a second term after it emerged that the first term was illegal, given that Sharma didn’t have the required academic credentials. The institute’s Board went ahead anyway.

Earlier in 2019, former Gujarat IPS officer Rajnish Rai was appointed assistant professor at IIM-A. The Ministry of HRD (as the Education Ministry was then known) had written to IIM-A, asking why Rai had been appointed when he was under suspension, but the institute had defended the appointment.