The Lok Sabha recently passed the IIM Bill which grants greater autonomy to Indian Institutes of Management (IIMs). The bill which is currently pending approval in the Rajya Sabha declares IIMs to be institutes of national importance and allows them to grant degrees instead of the earlier diplomas.

Stressing on the importance of autonomy, G. Raghuram, director, IIM Bangalore says, “We must acknowledge that there has been a lot of autonomy in terms of design and delivery of our curriculum, faculty recruitment, sourcing funds as well as generating revenues which has made IIMs what they are." The current bill, if it becomes an Act would only enable the IIMs to move into a higher orbit of excellence, he adds.

“The Bill empowers IIM Boards, so they will be able to approve strategic plans, oversee execution, and reward performance," says Ashish Nanda, former director, IIM Ahmedabad. According to him empowered boards will motivate IIM leaders to set strategy and implement it as well as reduce delays and inflexibility associated with centralised decision-making.

Since leadership positions such as that of the chairman and director will be decided by the board level, there is less likelihood of these important positions staying vacant for long stretches of time, he adds. Raghuram concurs, “Apart from enabling us to give formal degrees, the Bill ensures that appointments need not be processed by the (HRD) ministry."

However, concerns have been raised over IIMs not acting on government’s suggestions such as reservation for marginalised groups in faculty recruitment. “IIMs will continue to follow the laws of the land and continue to be responsive to societal considerations," responds Nanda.

Further, greater autonomy brings about the need for greater accountability. While the Comptroller and Auditor General will audit the expenses incurred by the institutes, how other aspects of the institutes will be regulated remains to be seen.

For instance, experts worry that this move may disrupt the PGDM (the postgraduate diploma in management given by IIMs and other B-schools) ecosystem. According to SS Mantha, former chair, All India Council for Technical Education, all B-schools offered a PGDM as that was an industry standard offered by the top-rated institutions like IIMs but when IIMs will offer an MBA degree, PGDMs may be rendered irrelevant. “Apart from IIMs, several reputed B-schools are private entities which have been running autonomously since the beginning but offered a diploma as that was the norm which stands challenged with IIMs granting degrees thereby raising issues of PGDM-MBA equivalence," he says.

This, however, may not be a serious concern for the top ranked private institutes, some experts feel. “The PGDM had become a commodified entity with several institutions offering it as it was in vogue and thus the ecosystem stands disrupted but reputed institutions seem unlikely to be affected by this move," says Rajan Saxena, vice-chancellor, NMIMS University and chairman, FICCI Higher Education Committee. “A PGDM from an XLRI (Xavier’s School of Management) or an MDI (Management Development Institute) will continue to be relevant as quality will be a more important metric than just nomenclature."

The real challenge according to him lies in how this autonomy is executed. “While the intent of this bill may lie in granting administrative freedom, real autonomy comes from the freedom to raise funds and regulate fees, among other things," says Saxena. “There are several grey areas in the bill that are not clearly spelt out such as the freedom to draw an independent salary structure for faculty that is higher than what is being offered at other central universities or issues such as the recommendations of the seventh pay commission." According to him, institutions can withstand any kinds of governmental pressure only if they can independently decide on financial matters which can be difficult if government is the primary funding source, especially in the case of newer IIMs.