Bill will lead to erosion of autonomy and 'sweeping centralization of authority', says A.M. Naik, chairman of the IIM-A Board of Governors and IIM-A Society
New Delhi: The Indian Institute of Management-Ahmedabad (IIM-A), the country’s best known business school, has flagged concern over the proposed IIM bill, saying it will lead to erosion of autonomy of the institutes and vest “sweeping centralization of authority" in the government.
IIM-Bangalore, IIM-Calcutta and IIM-Lucknow, too, have expressed their worries over the draft bill.
In a strongly worded letter to Union human resource development (HRD) minister Smriti Irani, A.M. Naik, chairman of the IIM-A board of governors and IIM-A Society, said, “I would like to convey deep reservations on the proposed IIM bill that has been put up for public comments."
“If the bill is passed in the current format, then there will be a revolt in the IIM system," J.J Irani, chairman of the board of governors of IIM-Lucknow, said over the phone from Jamshedpur.
Naik and IIM-A director Ashish Nanda pointed out that the draft bill that had the approval of all IIMs, including IIM-A, was very different to the one that has been put up for discussion.
“From the chairman’s selection to constitution of the board, from deciding the fee structure to formation of a department, even construction on campus, everything will require the government’s approval," Nanda said.
India has 13 IIMs and six more will open in the current academic year. The existing 13 IIMs have an intake capacity of around 3,500 students; nearly 200,000 aspirants vie for these seats through the Common Admission Test (CAT) every year.
IIMs have fiercely guarded their autonomy over the years, successfully resisting an IIM bill that was proposed in 2012-13 with a provision for a council of the kind that oversees the Indian Institutes of Technology (IITs) and is headed by the HRD minister. The provision for an IIM Council has been replaced in the latest draft bill with a proposal for a coordination forum to be headed by the minister.
Naik said that while it is Prime Minister Narendra Modi’s vision to develop 25 world-class institutes in India, the proposed bill will have the opposite effect.
All hopes of developing IIMs as world-class institutes will be dashed as the new bill will take away the business schools’ autonomy and make for centralization of authority, Naik and Nanda said at a press conference on IIM-A’s campus on Thursday.
“We are not against accountability but the government cannot micro-manage day-to-day affairs of IIMs," Nanda said, adding that different IIMs are trying to work in different ways and innovate in order to excel but the new bill will take away the spirit of competition.
The director said his vision of building IIM-A along the lines of Harvard Business School will not materialize if the bill is implemented. He, however, was “hopeful that the issue will be resolved through dialogue with the government".
Naik, who is also the group executive chairman of Larsen and Toubro Ltd, in his letter referred to two particular clauses in the bill—sections 3(k) and 36— saying these prescriptions will lead to “sweeping centralization of authority, currently held by individual IIM boards, with the central government".
While the first clause reads, “Regulations mean regulations made by the board with the approval of the central government", the second states: “The board may, with the approval of the central government, by notification, make regulations not inconsistent with this Act and the rules made thereunder to carry out the provisions of this Act".
Naik’s letter holds significance as the HRD ministry has been pushing for the IIM bill, claiming it has held consultations and all stakeholders are on board. The ministry had not put the bill up for public discourse before sending it to the cabinet in March; the cabinet returned the bill asking the ministry to put it up for debate.
IIM-A has also asked the HRD ministry to extend the public discourse till 31 July. The ministry on 9 June had asked for comments by 24 June.
J.J Irani said the “purpose of bringing a bill was to give more freedom and independence to IIMs but the current bill with the addition of two sections—35 and 36—has turned all this on its head".
In section 35, for instance, the draft bill empowers the central government among other things to “make rules, for carrying out the provisions of this Act. In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely: (a) manner of appointment of chairperson under clause (a) of sub-section 2 of Section 11; (b) such other powers and duties of the board under clause (x) of sub-section 2 of section 12; (c) the terms and conditions of service".
Irani, a former managing director of Tata Steel Ltd, said the ministry is trying to “centralize the powers of the IIMs and control them", which “will not be good" for the system. He said the intention of the bill as mentioned in the initial paragraphs of the draft is fine but the details go completely against that intention. He said all the leading IIMs are in touch with each other and are “opposing" the bill.
Kiran Mazumdar Shaw, chairperson of the board of governors of IIM-Bangalore, tweeted that the “draft IIM Bill 2015 compromises autonomy" and is “not in the spirit of government’s ‘minimum government, maximum governance’ maxim".
Ajit Balakrishnan, IIM-Calcutta chairman, did not respond to calls or a text message sent to his mobile phone. But a professor at the institute, on condition of anonymity, said the concern is over how the government will implement the bill.
Vamshidhar Guthikonda, an alumnus of IIM-Bangalore, accused the government of trying to micro-manage the IIMs and said a group of alumni from the institute had sent their feedback to the HRD ministry.
“What is the ministry trying to fix when nothing is wrong with the top IIMs? The draft bill has come without enough consultation with alumni groups or industy leaders," Guthikonda, from the 2000 batch, said.