Friday, June 12, 2015

Government plays safe, puts draft IIM bill up for debate

A draft bill to improve the governance of Indian Institutes of Management (IIMs) proposes to set up a coordination forum and formalize a closer scrutiny of the premier B-schools — from directors’ tenures to a corporate-style annual report with details of the highest-paid employees. The draft bill also proposes a four-year term for the chairman of the board of governors instead of the current five years and seeks to keep the number of board member to 15 across all IIMs.

“What the government is trying to do is keep a close watch on the functioning of these institutes without infringing upon their autonomy,” a government official said, requesting that he not be named. The human resource development (HRD) ministry has now put up the draft bill on mygov.in, the government’s crowdsourcing website, inviting comments and suggestions.

A second government official said the draft bill “has tried to explain the role of different stakeholders”, as the 2008 R.C. Bhargava Committee report on IIMs had suggested that responsibility be fixed on “key players” to improve accountability at these institutes. This official, too, requested anonymity. “Divided responsibility for governance, and lack of clarity of the role of government, boards, chairman and the directors has meant that none of the key players has any real accountability for results,” the Bhargava committee said.

The committee had also suggested that the boards of IIMs be reconstituted and consist of 11 members against the present 24-26. Six of these would be independent professionals and the other five would be: a nominee each of the central government, state government, faculty, and the chairman and director. No person should be a board member for more than six years, with a single term of three years. Board members would be expected to have a minimum of 75% attendance. The second government official said the draft bill aims to streamline the functioning and governance of IIMs.

On the director’s role, the draft bill says the person shall function as the chief executive officer of the institute and present an annual report. In the report, the director shall mention the key achievements and targets — from shortfalls in expenditure to surplus of income, appointment of faculty members and officers, performance indicators and internal standards set by the institute, including innovation in teaching, research and application of knowledge.

“The report of the director shall also include a statement showing the names of the five officers, including faculty members and other employees of the institute, who received the highest remuneration (including allowances and other payments made to such employee) during the financial year and the contributions made by such employees during the financial year,” the draft bill said. It shall also indicate whether any such employee is a relative of a member of the board or academic council of the institute and “if so, the name of such member; and such other particulars”.


An IIM professor said though the draft bill has clearly mentioned that a chairman of the board can be selected for a second term, it is silent on the appointment of a director. “It means they don’t want a director to get more than a single term. The logic is ambiguous,” said the professor. He, however, said having a fixed number of board members will lead to better decision-making.

But both the government officials cited above said more than the content of the bill, the HRD ministry is intrigued that the cabinet has sent back the bill for public comments after keeping it with itself for more than 10 weeks. “We had done the consultations with key stakeholders and thought it would be enough, but higher authorities told us to put it up in public,” said another government official, adding that the government is perhaps thinking that after public scrutiny it will be easier to get Parliament’s nod.

The official said the “huge IIM lobby”, in an election year in some states, can create a problem for the bill in Parliament. “Opposition political parties have become very active ahead of the Bihar assembly election later this year and the huge IIM lobby will lap up the issue. Like labour reforms, the government will be accused of going ahead arbitrarily without enough consultation. Public scrutiny may delay the bill by a few more months,” said the official.

Shikhar Mohan, an IIM Indore alumnus, said putting the bill in the public domain is a welcome move. He suggested that the bill should allow one-year courses at IIMs to get MBA status keeping in mind international trends. Mohan said some 400 IIM alumni and students plan to send a petition to the HRD ministry and the Prime Minister’s Office outlining these proposals.

Source: Mint, June 12, 2015
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