Indian Institute of Management Bill, 2023

Why in news?

The Indian Institute of Management Bill, 2023 was recently introduced in Lok Sabha.

What is Indian Institute of Management Act 2017?

• Institutes of national importance- It declared 20 existing IIMs as “institutions of national importance.
• Aim- To empower IIMs to attain standards of global excellence in management, management research and allied areas of knowledge”.
• Autonomy- The legislation seeks to grant greater administrative, academic and financial autonomy to these IIMs.
• The institutes will be made free of government interference and will be board-driven.
• Offer degrees- The legislation would grant IIMs power to award full-fledged degrees instead of diplomas.
• Board of Governors- It is the executive body of each IIM, comprising up to 19 members.
• In 19 members, 2 members will be nominees from the central and state governments, respectively. The Board appoints its own Chairperson.
• Director- It is appointed by the Board of Governors for each IIMs, A search committee will recommend names for the post of the Director.
• Functions of Academic council- It shall be the principal academic body of each institute which will determine the
  • Academic content
  • Criteria and process for admission to courses
  • Guidelines for conduct of examinations.
• Coordination forum- It is the representation from the 20 IIMs which is set up to discuss matters of common interest to all IIMs.

What is the need for amendment?

• Tussle with director- At IIM Ahmedabad, faculty and alumni were up in revolt against the then director’s decision
  • To change the institute’s logo
  •  To demolish the Louis Kahn structures on the campus which are widely regarded as among the architectural marvels of our times.
• At IIM Calcutta, the majority of faculty signed a petition against the director’s way of functioning.
• The Board of Governors took the extraordinary step of curtailing her powers following which she left before the end of her term.
• Legal battle- At IIM Rohtak, the government is locked in a legal battle with the institute over the director’s continuance in office.
• Low rank of IIMs- Evidence suggests that some IIMs lower in rank unchallenging power of Director.
• Fee structure- There is a rise in the fee for the MBA course, which is not related to the costs of the course.
• Lack of accountability- The Board of Governors’ role is ineffective as there were only 2 Government nominees who played a passive role.
•  The other members have no stake in respective institution and no incentives to exercise the necessary oversight.
• Governance vacuum- The Act requires Board of Governors (BoG)  to commission an independent review of the institutes at least once every 3 years and place the report in the public domain.
• Among the top four only the review report of IIM Bangalore is available on websites.

What are the new features of the bill?

What are the other amendments?

• Functions of visitor- It prescribes the primary roles for the visitor
  • To make appointments,
  • To audit the working of institutions,
  •  To conduct an inquiry.
• Dissolution of Board- The central government prescribes the conditions and procedure for dissolving or suspending an Institute’s Board.
• If a Board is suspended or dissolved, the central government will constitute an interim board for six months or until a new Board is constituted.
• IIM classification- The National Institute of Industrial Engineering (NITIE), Mumbai is classified by the bill as IIM, Mumbai.

What lies ahead?

• IIT governance - Government control has not kept the IITs from creating a brand that is way above that of the IIMs.
• Democratic accountability- It is mandatory in a public institution which will improve the governance and administration of IIMs.
• US model- Private universities are funded through large endowments and the state supports research.
• The donors have deep emotive connect with the institutions and hence there is no game of large profits which improves the competitive environment and discipline of the financial markets.
• Californian system- The Governor of the state often sits on the board which is best in the world.

Quick facts

References

1. The Hindu- IIM bill is a bold move
2. Indian Express-Concern over autonomy of IIMs
3. PRS- IIM bill 2023