Indian Institute of Management Act, 2017

Indian Institutes of Management Bill, 2017 was passed on Lok Sabha in July, 2017 and Rajya Sabha on December 19, 2017. This law brings greater transparency and autonomy in the working of the IIMs.

Salient Provisions

• The act declares 20 existing Indian Institutes of Management (IIMs) as institutions of national importance and confers on them the power to grant degrees. Earlier they were awarding post graduate diplomas to their students.
• Each IIM will have an executive body i.e. Board of Governors, comprising up to 19 members.  It will nominate 17 board members including eminent persons, faculty members and alumni.  The remaining two members will be nominees from the central and state governments, respectively.  The Board appoints its own Chairperson who will have tenure of four years.
• Powers of the Board
  • Power to review the performance of each IIM, to remove a director etc.
  • Director of each IIM will be appointed by the Board of Governors via a search committee who will recommend names for the post of the Director. The director will have a tenure of 5 years.
• The Academic Council of each IIM will determine the:
  • academic content
  • criteria and process for admission to courses
  • guidelines for conduct of examinations.
• A coordination forum consisting of 33 members will be set up, which will include representation from the 20 IIMs. It will be headed by “an eminent person” shortlisted by a search-cum-selection committee, for a term of two years.It will discuss matters of common interest to all IIMs and will be an advisory body.
• The IIMs’ accounts will be audited by the Comptroller and Auditor General of India.

Potential Positive Implications

Currently, all IIMs are registered under under the Societies Act, so they were not entitled to award degrees but only a post graduate diploma. Similarly, those pursuing doctoral studies are awarded the title of a ‘Fellow’ at the end of their research. Although both ‘diploma’ and ‘fellow’ are equivalent to an MBA / Ph.Dand are accepted in India, yet not accepted universally. Now this is set to change after according them the status of institutes of national importance.

Now IIMs will enjoy more autonomy as the power of appointment of both director and chairperson lies with the board without any interference from the government. Therefore making them first set of ‘Institutions of National Importance’ in which the President will have no direct role.

There is an accountability mechanism as periodic review of performance is done by Board of governors independently and also auditing of accounts is done by CAG. With this act, the IIMs will come in the league of IITs, NITs and AIIMS.

Key Issues

Faculty Reservation

Currently, the IIMs do not present social diversity in their faculty recruitment. In most of the IIMs, number of SC/ST/OBC are far less in number as compared to general category. The bill has also not done much on this front as it has a vague enabling provision on faculty reservation. It is the responsibility of the top institutes to give opportunity to historically disadvantageous sections of the society.

No Level Playing Field for Existing B-schools

Currently other private B-schools are also providing the same diploma as provided by the IIMs. However, once the legislation comes into force the there will be no level playing field. The newly opened IIMs like Ranchi etc will be far ahead of XLRI,SP Jain etc. just because of the fact that they will provide degree unlike Private B-schools. This will not only confuse the students but will also divert them from well known private institutes to the IIMs because of their greater acceptability. Other private management institutes are demanding that they need a comprehensive bill covering all management institutes and not just IIMs.