Time to revisit the IIM Act 

News: Recently, IIM Ahmedabad (IIMA) witnessed a lot of turbulence over changes in the logo. Other IIMs in the country also witnessed disturbances over a variety of issues.

This has raised questions over governance in the premier management institution of India. 

What changes have been introduced by the IIM Act 2017? 

The Act has given formal shape to the considerable autonomy which the IIMs have been enjoying so far. In fact, the Act has enhanced the autonomy of the IIMs in the following ways:  

(1) The government left the appointment of the chairman and the director to the board, and secondly, it has decided not to influence the working of the IIMs.  

(2) The central government and the state government have one representative on the board of IIMs. These nominees play a passive role. Earlier, they used to be active.  

(3) The IIM Act says that the IIM’s board is accountable to the government. IIM boards evaluate the performance of the institute once every three years through an independent agency. Then, it would submit an action taken report to the government. Further, the report would be placed in the public domain.  

What have been the controversies since the enactment of the IIM Act? 

Erosion of faculty governance in IIMs. Earlier, IIMs used to be called as faculty-governed institutions. The faculties used to be consulted in key decisions like admissions, placement, course syllabi, recruitment of faculty, etc. Now, faculties are not consulted on proposed changes. The decisions are taken at the level of the Director and approved by the Board of the institution.

– For example, in 2008, the Board of IIMA announced a 100% fee hike for its post-graduate programme. Thereafter, the faculty were informed.

– Now, the logo of IIMA has been changed by the director and Board without consulting the faculty members.  

The director appoints the faculty members to the board. The appointed faculty is supposed to act as a bridge between the faculty and the board. However, traditionally, the faculty used to elect its representatives to the board. 

In addition, the norms for the appointment of dean, which is a very important post in an educational institution, has not been fixed. 

In India, the Board members come and go. They have virtually no stake in the IIMs. There is no meaningful accountability of the director or the board in IIMs.  

How can the governance deficit be addressed? 

The government should have a meaningful and active role in the governance of the IIMs. It should expedite the creation of a new higher education regulator in India. 

The govt must constitute an IIM Advisory Board (IAB). It will commission an independent performance audit of each IIM every three years. It should also be empowered to propose chairman and directors for the IIMs like done by the Banks Board Bureau (BBB) for public sector banks. 

The IIM Act must be amended. It should include a provision that faculty members on the board are chosen by the faculty and not by the director. 

The govt nominees on the board should play a role on important issues. They should demand clearly defined criteria for important posts such as those of dean, membership of the board and membership of the committee that evaluates faculty. 

Source: The post is based on an article “Time to revisit the IIM Act” published in the Business Standard on 8th Apr 22.