The Indian Institutes of Management (Amendment) Bill, 2023, which significantly enhances the management oversight of the institutes and vests greater authority in the President of India, was successfully passed by the Rajya Sabha on Tuesday. This development marks a notable shift in the premier business schools’ autonomy, entrusting more powers to the central government.
The Bill garnered approval through a voice vote during the Rajya Sabha session. Prior to this, on August 4, the Lok Sabha had already passed the Bill, setting the stage for comprehensive changes in the Indian Institutes of Management Act of 2017.
The key modification introduced by the Bill designates the President of India as the Visitor of each institute covered under the Act, thereby positioning the highest authority of management accountability with the head of the nation.
Under the current structure, the Director of an IIM is appointed by the Board of Governors, relying on the recommendations provided by a Search-cum-Selection Committee. The Bill introduces a new mandate requiring the Board to obtain prior approval from the Visitor before confirming the appointment of an Institute Director. Additionally, the central government will now prescribe the procedure for Director selection.
In a move to reshape the composition of the Search Committee, the Bill decreases the number of members representing eminent administrators, industrialists, and educationists from three to two. Moreover, it introduces a new member, nominated by the Visitor.
Notably, the Bill empowers the Board to seek the Visitor’s prior approval before initiating the removal of a Director. Furthermore, the Visitor is granted the authority to terminate a Director’s services, as may be prescribed. The Bill outlines that the Chairperson of the Board will be nominated by the Visitor.
A distinct procedural change is proposed by the Bill for inquiries involving IIMs. It grants inquiry powers to the Visitor, who can appoint individuals to review an Institute’s work and conduct investigations into its operations. The Visitor can issue binding directions based on the inquiry’s report, and the Board is also empowered to recommend such inquiries to the Visitor.
The Bill includes provisions for the central government to establish conditions and procedures for dissolving or suspending an Institute’s Board. In cases where a Board is suspended or dissolved, the central government will establish an interim board for a duration of six months or until a new Board is constituted.
Additionally, the Bill alters the composition and role of the Coordination Forum, an entity encompassing all Institutes. The Chairperson of the Forum, previously chosen through a Search-cum-Selection Committee, will now be nominated by the Visitor. The amendment also entails that all Institute Chairpersons will become ex-officio members of the Forum.
In a significant reclassification, the National Institute of Industrial Engineering (NITIE), Mumbai, is now formally categorized as IIM Mumbai under the provisions of the Bill.
