Wednesday, May 23, 2007

IIM Bill

With the SC going into summer recess, I thought the IIMs were in were for a spell of quiet for at least a month or so. I was wrong. The IIMs are in the news today, with an ET report on the proposed IIM Bill.

The government is working on a law that would limit the financial freedom enjoyed by the IIMs. The proposed Institutes of Management Act, modelled on the Institutes of Technology Act 1961 would make it virtually impossible for the B-schools to have recourse to funds outside of annual grants from the government

I find the second sentence rather odd. The IITs have raised significant funds abroad by setting up overseas trusts- indeed, they have had more success in raising funds than the IIMs. So, I can't see how an IIM Act modelled on an IIT Act would come in the way of fund-raising.

How else would the proposed Act change things at the IIMs? From the ET story, I was able to pick the following:
  • The IIMs would have to present their financial statements to Parliament. Not a big deal since the IIMs are anyway subject to CAG (Controller and Auditor General) audit.
  • New investments made by the IIMs would have to be with the approval of the central government. I wonder whether this refers to all capital expenditure or only to items such as setting up new campuses elsewhere. I doubt that the IITs clear routine capital expenditure with the government.
  • The IIM Board may have to include two MPs as in the case of IITs.

Excuse me if I sound naive but from what has appeared in today's report, I can't see any major threat to the IIMs' autonomy. Each of the IIMs is now governed by a separate Memorandum of Association. The government wants to replace these with a common administrative framework for all IIMs that underlines IIMs' accountability to Parliament.

The IITs have been operating under such a framework and have done quite well for themselves. So, unless there is something different in what finally emerges, I don't see that there is cause to fret and fume.


Wanderer said...

Prof. Ram Mohan,

The IIT's have done well at the undergraduate level. At the graduate level, they are far from successful. And about the former, one can again argue whether it is the success of IITs or of JEE.

Now coming to the question of autonomy, I have many a times heard senior faculty at IIT complain that they cannot hire professors from abroad. There isn't "freedom" of academic employment due to national restrictions, and the quality of research in IITs is far from excellent.

I do not know whether a direct comparison or analogy holds between IITs and IIMs, given their different niches and visions, but certainly, there's a lot of room for progress at both places.

T T Ram Mohan said...

Well, the IIMs have not had conspicuous success in hiring professors from abroad either, meaning foreign faculty. When it comes to recruiting Indians from abroad, the IITs have probably been more successful because it is easier to get people in engineering and natural sciences than in management.

I agree there is room for improvement at both IITs and IIMs. My contention has been that this may not have that much to do with any restriction imposed by government.