The HRD Ministry’s draft bill on the Indian Institutes of Management (IIMs) has raised a storm of protest from the boards of most of the premier institutes.

The ostensible purpose of the Indian Institutes of Management Bill, 2015, is to declare them as “institutions of national importance”, and “empower them” to “attain standards of global excellence in management, management research” (etc, etc). The problem is the government has quietly tried to give itself a say in crucial decisions. From the appointment of the board and its chairman to deciding the fee structure to the creation of new academic departments, a government nod is required.

In other words, the bill will enable some form of government intervention in the functioning of the IIMs rather than giving them greater autonomy. If there is one thing HRD Minister Smriti Irani wants to be remembered for beyond her wayward declaration of her own academic qualifications in election affidavits, she should set our IIMs free.

IIM Ahmedabad. Agencies

IIM Ahmedabad. Agencies

If she doesn’t, she is going to find more criticism headed her way – and not from her usual political detractors. A Mint report quotes JJ Irani, Chairman of IIM, Lucknow, as warning of a “revolt in the IIM system” if the current version of Irani’s bill is passed.

The top IIMs are clearly be in a mood to fight for their independence. Among others, the chairmen of the big four – IIM, Ahmedabad, IIM, Calcutta, IIM, Bangalore, and IIM, Lucknow – are likely to fight to retain their autonomy, with The Economic Times quoting IIMA Chairman AM Naik (boss of Larsen & Toubro) as saying “the new bill gives sweeping powers to the government, which makes the institution only an operational centre while all the major directions and approvals are allowed only from the Centre.”

Naik indirectly hinted that the fight might well be elevated to the level of Narendra Modi if Smriti Irani does not relent. ET quotes him thus: “Currently, the matter is too small to raise with the PM. We will discuss at a certain level and we expect that finally sense would prevail.”

To be sure, the IIMs are not the last word in management education or pedagogy. None of them is at the cutting-edge of management knowledge creation in the global context, but they have two major achievements to their credit.

First, they have created a brand that is now acknowledged globally as the prime hunting ground for talent.

Second, the entry filter – the common admission test – is so robust that it is difficult for anybody barring the best to get in. It is easier to get into a Harvard or Wharton than one of the Big Four IIMs.

The IIM bill wants to enhance the acceptability of the institutes’ passouts by awarding degrees instead of diplomas, but no one seems to have found this a handicap in the flagship course so far. This fact is acknowledged in the government’s Mygov portal itself: “The Post-graduate Diploma in Management Programme was relatively unaffected by (the) absence of a formal degree, both in terms of recruitment of students as well as suitable placements in (the) job market, but the Fellow Programme in Management did not get the same status as that of a PhD in the job market, especially in faculty appointments. As a result, the Fellow Programme in Management (equivalent to PhD), without the formal degree stamp, has not, been able to attract talented students, required to develop a strong research base in the country in the field of management education, and also address the faculty shortages affecting management institutions in the country. The proposed Bill will address this gap.”

One wonders how circumscribing the autonomy of the IIMs is going to attract more high-quality students for the fellowship programmes and cutting-edge faculty.

Rapid expansion over the last decade has ensured that the IIM franchise is slowly being diluted, creating fissures in the system that politicians can exploit. There are now 13 IIMs, and six more are in the works, but beyond the top five or six IIMs, brand equity has probably taken a dent.

Governments feel emboldened to intervene because the newer IIMs need both public money and governmental support to grow, while the top IIMs don’t need any nannying by politicians. In fact, they resent it, as AM Naik’s and JJ Irani’s comments above show.

The top four IIMs – Ahmedabad, Calcutta, Bangalore and Lucknow – can probably find enough private sector funding to retain their autonomy and grow into real world class institutions, but that is precisely what the ministry does not want. The power of the HRD ministry stems from controlling the top IIMs, and not the latter-day entrants like Kashipur or Rohtak.

The ministry thus tends to use the weaker IIMs to claim that it has the support of many boards while interfering with the IIMs’ autonomy.

The draft bill that has got the IIM boards’ goat makes some right moves, like the corporatisation of the IIMs, but the troublesome provisos are many, including the right to determine board appointments, set policies, and create a coordination forum of IIMs, where the weight of the top four IIMs will be diluted.

Para 21(1) in the draft bill says that the IIMs “will be bound by such directions on questions of policy as the central government may give in writing from time to time” – which, given that it was the taxpayer who funded the IIMs in the first place – is not unreasonable. However, the ambit of policy is ill-defined, and para 21(2) makes it clear that “whether a question is one of policy or not” will be decided by the government, and its decision “will be final.”

If areas of policy are not clearly defined, the ministry can clearly intervene in many areas by calling them policy. The creation of new departments or payment of higher fees to foreign faculty could be called policy issues.

Nowhere is autonomy more compromised than in the selection of directors (effectively CEOs of each IIM). The board chairperson, already a government-appointed functionary, is supposed to head a search-cum-selection committee which will have other government nominees, but if the government does not like the selection made, it can overturn it. A crucial para says that where the visitor (the president) “is not satisfied with the recommendations of the search-cum-selection committee, he may ask the…committee to make fresh recommendations.”

Another clause that could create scope for intervention is the creation of a Coordination Forum of IIMs headed by the HRD Minister. Para 30(1) says the centre can, by notification, create a coordination forum. In theory, an inter-IIM forum is not a bad idea, but when so many states and central netas and babus are involved in the forum, and when the weaker IIMs are larger in number, what is the chance that the big four IIMs will have their way in key issues?

As noted earlier in Firstpost, not all IIMs are equal. The first three (Ahmedabad, Calcutta and Bangalore), and possibly the next two (Lucknow and Kozhikode) have developed significant brand equity of their own, which the remaining eight IIMs may not have.

The logical thing to do – assuming you want the IIMs to create more value – is to set the top-notchers free, with the government concentrating its investments on the newer ones.

The way forward should run something like this.

One, each IIM should be free to set its own curriculum and teaching standards, faculty salaries, and student fees, subject only to the normal reservations for SC/ST, etc. Autonomy should not only be retained, but extended.

Two, expansion in the aggregate student intake should be determined by each institute itself – not the government. If the government wants say, and IIMA, to share its equity with a new one at Rajkot, the parameters for performance should be set by IIMA and not the government. Else, the IIMA brand will be whittled down steadily. Put another way, IIM Rajkot should be a subsidiary of IIMA. It should thus be IIMA-Rajkot campus, rather than IIM Rajkot.

Three, each IIM should be free to generate its own funding, from alumni or corporates, and should ultimately be free to break out of government control altogether. The government’s role should be to incubate new B-schools, not reduce them to eternal dependence.

Four, the brand of each IIM – despite the common name – is unique and the top three or four surely can fend for themselves. They have a vested interest in excellence, and any government interference can only take them towards greater mediocrity. The top three or four should be encouraged to become truly autonomous private institutions.

Five, there is no issue with the common entrance test, where the best and brightest go to the top IIMs, and the lower scorers to the remaining institutes. But an IIMA or IIMC (or any IIM, for that matter) should be free to add layers to the selection process that will allow them to chase diversity beyond CAT scores.

If the ultimate objective is excellence and not mediocrity, the government has to set the IIMs and IITs free, not try and put a noose around their necks by creating pointless councils and coordinating committees.

Smriti Irani will earn kudos by setting the IIMs free, and not by trying to restricting their autonomy. This is her chance to redeem herself.

See original article: 

IIM Bill: Smriti Irani should get off the backs of IIMs, not hem them in