Smriti Irani, Prakash Javadekar after a cabinet meeting

Earlier this year, dissenting voices were heard within a section of the Indian Institute of Management (IIM) community over the relinquishing of government control under the new IIM Act. At least six directors, all of new IIMs, were concerned that this could undermine the accountability of the institute’s leadership. But the older institutes in Ahmedabad, Bangalore, Calcutta, Lucknow, Indore and Kozhikode did not share this view. Official records obtained by The Indian Express under the Right to Information Act show that much before the law was passed by Parliament, on December 19 last year, there was a strong difference of opinion within the government too — over IIM autonomy and accountability.

While the Human Resource Development (HRD) Ministry advocated retaining some form of government control over the institutes to ostensibly ensure financial and administrative propriety, the Prime Minister’s Office (PMO) wanted a more hands-off approach.

The draft law went back and forth for almost a year — from October 2015 to September 2016 — during which the HRD Ministry stuck to its guns under Smriti Irani but the resistance faded away after Prakash Javadekar took over in July 2016.

Under Irani, the Ministry held at least four discussions with the PMO and wrote three letters — including one from the then higher education secretary V S Oberoi to principal secretary to PM, Nripendra Misra — arguing why some of the changes being thrust on it were not feasible. The PMO, eventually, prevailed on all points of contention.
The ministry had to revise its Cabinet note thrice with over 10 substantive changes in all before it was green lit.
The key differences between the HRD Ministry and PMO include:

President as Visitor

The provision anointing the President as the Visitor of all IIMs was the biggest flashpoint between the HRD Ministry and the PMO. The former justified the clause on the ground that all existing Institutes of National Importance backed by an Act, like the IITs, NITs, IIITs, have the President as their appointing and dismissing authority.
While the PMO pushed for the delegation of the Visitor’s powers to the Board of Governors (BoG), the ministry was able to hold off any such change for the first nine months of the tussle. On June 15, 2016, then HRD Secretary Oberoi wrote to Mishra defending the provision.

“It is evident that such Acts (IIT, NITs, IIITs) passed by Parliament have a clear role of either the Visitor or the Central Government. If the IIMs come to be covered by an Act of Parliament, it would be difficult for government to not have any stake in the IIMs,” Oberoi’s letter states.

“It is not possible for the government to leave all matters, including matters of governance to the IIM boards. How would financial and administrative propriety be ensured if government were to adopt a hands-off policy as desired by the IIMs,” the missive adds.

The ministry finally agreed to drop the Visitor as the appointing authority for the BoG chairmen in July 2016, four days after Javadekar took over as the new HRD Minister.

It gave in after a joint secretary in the HRD Ministry, on Javadekar’s advice, met his counterpart in the PMO on July 9, 2016. Subsequently, the Visitor’s role, in appointment of the IIM director, reviewing the functioning of an institute and dismissal of the director and the chairmen, was erased from the Bill.

The Board was now empowered to do all of it. Ironically, half of the 13 new IIMs are now worried that this freedom will be abused by the Board.

Even after the HRD Ministry had relented, the Law Ministry objected to the deletion of the Clause on the Visitor. But the latter had to backtrack once it was informed that the change had been made at PMO’s behest.

Coordination Forum

The initial draft of the IIM Bill was modeled after the IIT Act. Hence, the HRD Ministry’s version had the minister as the head of the IIM Coordination Forum – the IIM equivalent of the IIT Council which is the highest decision-making body of the IITs. The PMO, however, suggested that a “person of eminence” should head the Coordination Forum.
Disagreeing with this, the ministry, in a file noting dated February 11, 2016, wrote, “The minister in charge heads the IIT Council also, and a similar provision has been given here. Having a minister chairing the Forum ensures that the common problems of the institutions are addressed in a harmonious way.”

The PMO removed the clause providing three MPs as members of the Coordination Forum. That apart, instead of four secretaries of states on the forum, PMO suggested two. “At the rate of four secretaries in the Forum, each state would get a turn only once in five years since there are 19 IIMs presently (2016). If we reduce it to two then each state’s chance would come one in ten years,” states the ministry’s remark on PMO’s suggestion. HRD eventually accepted all of the above.

Board composition

The PMO wanted the number of central government nominees on the Board of Governors to be reduced from two to one and increase the alumni representation from three to five.

The HRD Ministry did not favour either. In case the of alumni representation, the ministry felt that this “would give disproportionate weightage to one distinct group of Board members”. “Rather this may even lead to this group getting a quorum on its own along with Director and Chairperson and taking decision in absence of others,” states a file noting of February 11, 2016.

That apart, PMO wanted at least three women on the Board and one SC/ST member as opposed to one woman and one SC/ST member in HRD Ministry’s draft. The IIM Act finally reflects PMO’s suggestions.

Fee clause

The earliest draft of the IIM Bill, which was put up for public feedback in June 2015, resulted in a backlash from the institutes that felt several clauses threatened to infringe on their autonomy. This included a provision that stated the IIMs will need the approval of the union government before making any changes in the fee structure. After the furore, the ministry diluted this clause and institutes were then expected to only intimate the government about its fee. PMO wanted the ministry to drop the intimation bit too. The ministry relented.

The final Cabinet Note on the IIM Bill was moved on January 18, 2017. It carried 19 changes compared to the first note moved on May 13, 2016. The Parliament passed the Act in December 2018 and it came into effect on January 31, 2018.

The IIM Act, which came into effect on January 31, grants sweeping powers to all 20 business schools, including appointment of directors, chairpersons and Board members. Earlier, for instance, the director was appointed by the board but with the prior approval of the Appointments Committee of the Cabinet (ACC) headed by the Prime Minister. Of the 20 IIMs, 13 – in Raipur, Rohtak, Ranchi, Trichy, Kashipur, Udaipur, Nagpur, Vizag, Bodhgaya, Amritsar, Sambalpur, Sirmaur and Jammu – were set up in the last decade.