New Delhi: The government has given the Indian Institutes of Management (IIMs) more control over their budgets and allowed them to open branches in India and abroad.
IIMs can now approve their budgets, raise money and use it to create new posts and open new campuses without needing governmental clearance, human resource development (HRD) minister Kapil Sibal said in a meeting with the heads of the 10 IIMs.
The meeting on Wednesday also decided that IIMs can offer a ‘top up’ salary to professors—above the salary sanctioned by the government—to be able to hire the best faculty members and promote academic excellence.
“Autonomy should go hand in hand with accountability,” Sibal said after the meeting. “The faculty, the director and the board of governors should take steps to prepare annual action plans and key performance indicators at each level and be fully accountable and transparent.”
The meeting also accepted an internal report which proposes that IIMs raise funds from their alumni, many of whom are successful entrepreneurs or working in top managerial positions globally.
The report, prepared by a ministry-appointed panel, has suggested an initial plan for the four oldest IIMs—at Ahmedabad, Kolkata, Bangalore and Lucknow—to raise Rs400 crore from their alumni over a period of three years, Mint reported on Wednesday. The plan follows Yale University’s fund-raising model, under which the institutes will identify prospective donors, solicit money from them and keep them informed about how it is being used.
While accepting the panel’s proposals, the meeting decided that IIMs should raise funds from alumni as well as rich individuals.
The business schools will now set up fund development offices, appoint experts to raise funds and conduct roadshows and workshops, as suggested by the panel.
“The IITs (Indian Institutes of Technology) have done it successfully and now IIMs will do it. This will give them greater financial autonomy,” a ministry spokesperson said. “To raise funds, IIMs used to conduct executive programmes, which was affecting the research. With money coming from endowment, they will be better placed financially.”
Bharat Gulia, manger, education, at consultancy and audit firm Ernst and Young, said IIMs are looking for greater financial autonomy to grow as global educational brands. “And this is a significant positive step.”
The Wednesday meeting also accepted the report of a panel headed by R.C. Bhargava, chairman of Maruti Suzuki India Ltd, and chairman of the board of governors at IIM-Ranchi, which recommended reducing the number of governors from 26 to 14.
It decided that the director of each IIM will be selected by the government out of three names recommended by the IIM’s board of governors. The HRD ministry has been advertising the post until now.
The opening of three new IIMs at Raipur, Ranchi and Rohtak has taken the number of the elite business schools to 10. The older ones are in Kozhikode, Indore, Ahmedabad, Bangalore, Kolkata, Lucknow and Shillong.
Sibal said old and new IIMs should sit together to streamline the use of technology for class scheduling, attendance, mark compilation and so on.
The HRD ministry also informed the IIMs during the meeting that their request to be exempted from paying service tax on earnings from executive education programmes has been accepted by the finance ministry.