In this article, Sushant Pandey of Vivekananda Institute of Professional Studies, Delhi, discusses the Indian Institute of Management Bill, 2017.

Introduction

Indian Institute of Management (IIMs) are the educational institutions registered under the Societies Registration Act, 1860 as societies. Currently, there are 20 IIMs, each of them has a memorandum of association and rules specifying its objectives and system of governance.These IIMs offer the diploma courses of Post Graduate Diplomas in management (PGDM) which is equivalent to MBA and  Fellow programmes in management (FPM) which is equivalent to PhD. The association of Indian Universities provides as an equivalence of these qualifications as MBA and a PhD respectively.

In order to govern these institutions by a single Act, Minister of HRD, Mr Prakash Javadekar, introduced the Indian Institute of Management Bill, 2017 in the Parliament.

Why did legislature felt the need of the Indian Institute of Management Bill, 2017

The bill aims to declare the Institute of management to be national importance with a view to empowering these institutions to attain the standard of global excellence in the management, management research and allied areas of knowledge and to provide for certain other matters connected therewith or incidental thereto.

What are “Institutions of National importance”?

Institutions which serves as a pivotal player in developing highly skilled personnel within the specified region of the country or state are called “Institute of National Importance”. This status may be conferred to a premier public higher education institution in India by an Act of Parliament. These institutions receive special recognition and funding. After Passing the IIM Bill, all the IIMs will get the status of the Institute of National Importance. As per Ministry of HRD’s website, there are 91 institutions which fall under this category.

Institutions as a body corporate

According to section 3 of IIM Bill, 2017 the institutions will be from the date of passing of the bill, become the body corporate having perpetual succession and a common seal with powers to hold and dispose of property both movable and immovable and to contact anyone, and can sue and can be sued in his own name.

Objectives of IIMs

Sections 6 of IIM bill,2017, talks about the objectives of IIMs which includes:

• Carrying out research publications, consultancy and advisory work to advance new technology and innovation.
• Developing educational programme that advances the causes of education, teaching and learning across disciplines.
• Collaborating with management institutions and other educational institutions in India.
• Educating and supporting leaders who can contribute as professional manager and entrepreneurs.
• To provide the higher quality and to promoting the allied area of knowledge as well as interdisciplinary studies.
• Promote the social and gender equity

Powers and functions of IIMs

Under the Bill, IIMs will have powers and functions as mentioned in section 7, which include:

1. Management and administration of the institutes;
2. Regulating the admissions;
3. Conduct the examination and Examination evaluations;
4. Granting of degrees or titles;
5. Regulation of fees and other charges levied by the institutes.
6. Specify and conduct courses of study, training and research.
7. Evolve the innovative management education.
8. Take steps lower the cost of education and enhance the reach of education.
9. To deal with the property of the Institute.
10. To create the posts other than directors.
11. To appoint the committee for disposal of the business of the Institute.
12. To receive grants and other funds.
13. Create partnership etc.
14. Other necessary functions as may be necessary.
15. Other activities which are incidental to the attainment of the above all function.

Nature of the institutes after passing of the bill

Section 8 and 9 talks about the nature of institutes. Every institute will be a not for profit organisation and any surplus of the organisation will be used only for the growth and development of such institute or conducting the research. The Institute on the other side shall not discriminate among any student, teachers, workers, members etc. and will be open to all, irrespective of sex, race, caste, or class.

The institutes are barred from taking any kind of donations or any kind, which is as in the opinion of the board is opposed to spirit and object of the rule of non-discrimination. The admission in every institute’s academic course will be made through a merit assessment through criteria which shall be transparent Be transparent disclosed in the prospectus.

But the proviso added to the section says that the institute can make any special provision irrespective of being the specific provision can make special provisions for the employment or admission of women, persons with disabilities or for persons belonging to any socially and educationally backward classes of citizens and, in particular, for the Scheduled Castes and the Scheduled Tribes.

Board of Governors

Section 10(1) states that the principal executive body of each institute will be Board of Governors. The Board is responsible for the general superintendence, direction and control of the affairs of the institute. The powers of the Board include:

1. Policy-making;
2. Anually estimated budget approvals;
3. Formulation of development plans; and
4. Creation of academic, administrative, technical and other posts, etc.

Section 10(2) of the bill states that the Board shall comprise 19 members including:

1. A Chairperson, who is a distinguished person in the field of management or another such field;
2. Nominees from central and state governments;
3. Faculty members;
4. Eminent persons; and
5. The director of the Institute.  

Academic Council

Section 14 of the bill mentioned that principal academic body of each institute shall be called the Academic Council.

Composition of Academic Council

According to section 14, the composition of the Academic Council will include:

1. The Director,
2. Deans in charge of academics, research, and such other functions of the Institute;
3. Chairs and coordinators of various departments and schools; and
4. Full-time faculty at the level of professors; and
5. Such number of another full-time faculty as determined by the Board.

Functions

Sections 15 mentions the Functions of academic council, which will include:

• Specification of the academic content of the academic programmes and the criteria and process for admission to courses;
• Specification of the academic calendar and guidelines for the conduct of examination; and
• Recommendations for the grant of degrees, diplomas and other academic distinctions.

Director

Section 16 of the bill mentions that the director shall be the leader of the institute who shall be Chief Executive officer of the institute and will be responsible for the implementation of the decision of the board. He shall be appointed out of the search cum selection constituted the committee which shall be constituted by the board and that panel will recommend the name of the director.

The panel shall be consist of:

• Chairperson of the Board( ex officio),
• 3 member  from amongst eminent administrators, industrialists, educationists, scientists, technocrats and management specialists.

The director shall have the power and the functions that shall be assigned to him from time through regulation or provided under the law or delegated by the board. The director shall be usually held for the five years except in the case in cases of resignation or removal.

Funding

Under section 21 which mentions that the IIMs will discharge their functions on the basis of the grants received from the central government. On the other hand section, 22 says that the IIMs will have to maintain a fund which will be credited with funds received by it from the central government, fees charged by the institutes, grants or gifts, money received by the institute from the utilisation of intellectual property or any other money received by the institute. The money received by the institute shall be deposited to a bank account.

Section 22(3) mentions that every institute have to create a corpus fund for long-term sustainability of the Institute, to which shall be credited such percent of the net income of the Institute and donations made specifically towards such corpus fund as the Central Government may in accordance with the provisions of the Income-tax Act, 1961.

According to section 23, every institute have to maintain accounts as per standard a may be specified by the notification by the Central Government.

The accounts of the every IIMs will be audited by the Comptroller and Auditor General.

Annual report

Section 28 talks about the annual report which shall be made by the institute. Every institute shall prepare an annual report under the direction of the board, which shall include, among other matters, steps taken by the institute towards the fulfilment of its objects and outcome-based assessment of the research being undertaken in such institute. The report shall be submitted to the board, which will be published by the board on the website and shall also to Central Government who shall lay that before both the house of Parliament.

Coordination forum

Under section 29, a coordination forum will be set up to discuss matters that are of common interest to all the 20 IIMs which shall facilitate the sharing of experience, ideas and concern with the view to enhance the performance of all institutes.

The forum consists of persons including:

1. Chairperson;
2. Four Chairpersons from IIMs, by rotation for two years;
3. The Director of each IIM;
4. Five persons of eminence from the fields of academia or public service;
5. The secretary to the central government, from the ministry or department related to management education;
6. Two government secretaries from the states in which the IIMs are located, by rotation, each year.

Functions of coordination forum

Coordination forum shall have the powers as specified under section 30 of the Bill. which are as follows:

• Recommend to the Central Government, the institution of scholarships including for research and for the benefit of students belonging to the Scheduled Castes, the Scheduled Tribes and other socially and educationally backward classes of citizens;
• Deliberate on such matters of common interest to Institutes as may be referred to it by any Institute;
• Promote necessary coordination and co-operation in the working of the Institutes;
• Review the achievement of policy objectives; and
• perform such other functions as may be referred to it by the Central Government.
• The forum shall meet at least once in a year and submit its report on its function to central Government.

Analysis of the Indian Institute of Management Bill, 2017

The bill after passing will extends the autonomy of IIMs in various ways such as the appointment of the Chairperson of the Board of Governors, the Director, using the institute’s funds and providing variable pay to the Director. The existing IIMs were governed by the MOA and rules and IIM Bangalore. The existing functioning of IIMs and IIM Bill, 2017 have the following difference.

Existing Functioning	After passing of IIM Bill
Government representation on the board is 7 (4 center and 3 state)	Government representation on the board is 2 (1 center and 1 state)
Registered as a society under Mysore Societies Registration Act XVII, 1860	IIMs are declared as institutions of national importance and shall be a body corporate.
Can grant only diplomas and fellowship	Can grant degrees
Board appoints the Director, following the procedures, terms and conditions laid down by the central government.	A search-cum-selection committee appointed by the Board recommends candidates for the post of a Director.
Central government approval is required for deposit and investment of the Institute’s funds.	The Board determines the manner of deposit and investment of the Institute’s funds.
Total number of member in the Board is 28	Total number of member in the Board will be up to 19
Central government appoints the Chairperson from a panel of names recommended by a search committee. The five-member search committee is formed by the central government.	The Board appoints the Chairperson from amongst eminent persons in fields including management and public administration.
Prescribed by the Board of Governors.  Academic decisions are made involving all the faculty members (a collegiate system of decision making).	Prescribed by the Board of Governors.  The Academic Council determines the content of these courses of study.  The Academic Council composition includes: (i) the Director, (ii) all Deans, (iii) full-time faculty at the level of professors and any other full-time faculty as determined by the Board.

 

10 Key changes if this Bill receives the assent

• After passing the bill, the premier management Institution of India would now become an institution of national importance.
• The IIMs would have the power to grant degrees instead of diplomas and fellowships.
• Institutes will become the body corporate having perpetual succession and a common seal with powers to hold and dispose of property both movable and immovable and to contact anyone and can sue and can be sued in his own name.
• The board of each institute will be the principal executive body.
• The board of the institutions as per bill will be vested with the full autonomy including the power to appoint chairman as well as director and power to remove the director.The chairman of the board will be appointed for a period of four years, while the directors of each IIM will be appointed by the board for a period of five years through search cum selection panel.
• Accounts of IIMs will be audited by Comptroller and Auditor General of India.
• There will be an IIM coordination Forum to be notified by the Central Government which shall function as the advisory board and will be headed by the eminent person.
• Central Government can frame rules to give additional powers and duties to the IIM board, it will decide the terms and conditions of services of directors although the appointment will be made by the board.
• All the rules and regulations made by the Central Government or the Board will be tabled in Parliament.
• The board is vested with the power to review the performance of each IIM.