The Lok Sabha in India has passed the Indian Institutes of Management (Amendment) Bill, 2023, which has raised concerns among business schools due to the increased powers granted to the central government. The bill, introduced on July 28 and passed on August 4, amends the Indian Institutes of Management Act of 2017, designating the President of India as a Visitor of every Institute covered by the Act.
One of the key changes introduced by the bill is the requirement for the Board of Governors to obtain the prior approval of the Visitor before appointing an Institute Director. Currently, the Director of an IIM is appointed by the Board of Governors, based on the recommendations of a Search-cum-Selection Committee. The central government will now have the authority to prescribe the procedure for selecting the Director.
Additionally, the bill reduces the number of members on the Search Committee from three to two, while adding another member to be nominated by the Visitor. The Board will also need the prior approval of the Visitor before removing a Director, and the Visitor will have the authority to terminate the services of the Director, as may be prescribed.
The bill also introduces a new procedure for inquiries against IIMs, granting the power of inquiry to the Visitor. The Visitor will be able to appoint individuals to review the work of any Institute and hold inquiries into its affairs. Based on the report of such inquiries, the Visitor may issue binding directions to the Institute.
Furthermore, the bill allows the central government to prescribe the conditions and procedure for dissolving or suspending an Institute’s Board. If a Board is suspended or dissolved, the central government will constitute an interim board for six months or until a new Board is formed.
The bill also brings changes to the Co-ordination Forum for all the Institutes, with the Chairperson now being nominated by the Visitor instead of being selected by a Search-cum-Selection Committee. The bill ensures that all Institute Chairpersons will be ex-officio members of the Forum.
The National Institute of Industrial Engineering (NITIE), Mumbai, will also be reclassified as IIM, Mumbai, as per the bill.
While the bill aims to grant the central government more powers in the functioning of the IIMs, it has raised concerns among business schools, as it potentially dilutes their autonomy. Critics argue that this increased interference from the central government may impede the institutes’ ability to make autonomous and independent decisions.
It remains to be seen how these changes brought about by the Indian Institutes of Management (Amendment) Bill, 2023 will affect the functioning and autonomy of the IIMs, and how business schools will navigate these new developments.
