Why privatising IIMs will have grave repercussions?

The IIM Bill was recently passed in both Houses and the President has given his nod to the same. Thus, the Act makes IIMs institutions of national importance. I am now presenting before you what are some of the key features of the IIM Act and what may be the possible consequences of this Act.

First, the IIM Act makes the IIM boards powerful and autonomous. This is a good development. However, what could actually happen is far more interesting. The boards are self-appointing. In other words, board members, chairman, and directors are all appointed by the board. Chairman and board members of IIMs are usually owners, managing directors, chairpersons, etc. of large corporate houses of India. For instance, Mukesh Ambani, Kumar Mangalam Birla, Kiran Mazumdar Shaw, AM Naik, among others have been chairpersons of IIM boards.

In its current shape, the Act allows corporate houses to possibly have significant control over IIMs as there is no accountability of the board members and no well-defined appointment processes for board members so far in the Act. Complete absence of government control could possibly result in handing over of the great assets paid for by public funds to private corporations. Are we saying complete privatisation of IIMs will bear better results than they already are bearing? This appears to be a far-fetched outcome as IITs continue to do better than IIMs even with a great degree of government control. IIMs continue to do well even with limited government control as it stands today. In the past, there have been several instances where board members of IIMs have had a significant conflict of interest. Particularly, these conflicts are allegedly related to involvement in construction activities, employment in the organisation belonging to a chairman, seeking faculty position among others.

Next, IIMs are institutions of great importance primarily because of the academic leadership of its directors. The current act will end up making directors employees of the board with no independent voice if the government has no role in his/her appointment. How will a director be accountable to CVC, CIC, CBI, and CAG if the government has no role in his/her appointment? It is interesting that the director is the only whole-time executive member of the board and all other board members are non-executive and not full-time. He too is expected to be appointed by the board with possibly no government role. How will the board be accountable to the government without representation via the director of the institute? While the government continues to talk about the autonomy, the director will virtually have no autonomy as he could be disciplined and even removed by the board in the absence of no protection to his/her position via terms and conditions of appointment. What standard of academic leadership can be expected from a director in such circumstances is a question that should baffle most. Additionally, the delay in the appointment of chairmen and directors of several IIMs is usually on account of search and selection committees set up by the institutes and not the government. So, blame for these delays is largely with the institutes allegedly on account of lapsed and slow processes of the institute’s search and selection committees. Furthermore, when government rejects a panel, one may want to examine how many panels have been rejected till date out of the total number of panels submitted for consideration. Why are institutes not putting forth their selection criteria for board members?

Also, the IIM Act will allow boards to conduct the review of IIM institutes and its faculty every three years by an external agency. In other words, boards will review the faculty and could possibly take punitive action against faculty members. Consequently, academic freedom and the concept of tenure/confirmation will be severely dented. In other words, in its current state, the Act reduces IIM faculty to mere contractual employees who can be reviewed by an external agency every three years and can be possibly disciplined or removed? Faculty will have to toe the line of the board which comprises largely of people with limited understanding of academics. In other words, the faculty could possibly end up losing jobs if they do not follow directions of the corporate board.

Finally, the government of India has invested crores of rupees in developing these great institutions. Faculty members of these academic centres produce some of the best leadership talents, cutting-edge research, and public policy work. In a single stroke, all of this could possibly be reduced to a corporate fiefdom.

Great institutions like IIMs are built on the shoulders of their faculties and academic leadership, which needs to be protected and not pressured. Thus, in essence, the IIM Act in its current state only provides autonomy to a board led by owners of corporate houses but no autonomy to the academic leadership and faculty. Hence, privatisation of IIMs will be almost complete unless appropriate action is taken by the government.

The author is an Assistant Professor at IIM, Rohtak. Views expressed are personal.