Students attend a graduation ceremony at the Indian Institute of Management-Ahmedabad

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For generations of aspiring Indians, the pinnacle of business education has been a diploma from the prestigious Indian Institutes of Management (IIMs), which have operated independently under autonomous boards. Indian companies compete fiercely each year to snap up the newly minted graduatesfrom these standalone institutions. But the IIMs’ cherished autonomy is under threat.

In June, Prime Minister Narendra Modi’s government unveiled draft legislation that would permit the institutes to award MBAs and PhDs but would also establish government control over the institutes.

The proposal has prompted outcry from professors and graduates, who say such changes could undermine these bastions of educational excellence.

In particular, they have taken issue with clauses in the bill that say the IIMs would need government approval for all important board decisions, essentially stripping them of their freedom to innovate and run operations.

Board members “will always have to look over their shoulders and guess what the government wants”, says Biju Paul Abraham, academic dean of IIM-Calcutta.

“My sense is they will not interfere in everything, but they could ask ‘was this done with our approval?’”

Even if there was no deliberate intrusion, the additional red tape could cause institutional stagnation, he argues. “If you have to request approval for each and every thing, things get delayed. It is unnecessarily constraining [and] will be a drag on decision-making and the ability to respond quickly.”

This problem will be exacerbated as the number of IIMs increases, adds Prof Abraham. From 2007 to 2011, the Congress government created seven IIMs, while Mr Modi’s government has announced plans for more.

“The more institutions there are, the more difficult it will be for the government to look at what each IIM is doing and approve it.”

When the first six IIMs were established in Ahmedabad, Bangalore, Calicut, Indore, Kolkala and Lucknow, they were given government financial support but granted considerable freedom with board members drawn from the business community and other public spheres as well as government.

Academics say this independent structure allowed the original IIMs to remain dynamic and innovative.

“The [aim] was to keep them free from the kind of straitjacket or onerous regulations that might have affected other institutions directly under the control of the state,” says Ajay Pandey, dean of programmes at IIM-Ahmedabad.

The six IIMs collect enough from tuition, executive education programmes and consultancies to cover their annual operating costs. In recent years, however, they have chafed at their inability to award proper degrees.

Although Indian employers cared little about what the completion certificates were called, graduates seeking international jobs, promotions or hoping to pursue further studies sometimes felt held back by the lack of recognition abroad.

It has also hindered the ability of the IIMs to attract more students from overseas, which many professors believe would enrich the campus experience.

Ironically, it was this aspiration to award degrees that prompted discussions about a new law for the institutions.

“IIMs have been demanding an act that would enable [them] to offer degrees and PhDs,” says Ashok Banerjee, a professor of finance and the former dean of external relations at IIM-Calcutta. “We do get students from abroad, but they just do a term. If you want to truly internationalise you need this [capability].”

The furore over the IIM bill raises bigger questions over the quality of India’s elite higher education institutions, which fare poorly in global rankings of top universities, and which many academics argue have suffered from the stultifying influence of unimaginative bureaucrats and their political masters.

The proposed government influence over the IIMs has caused alarm beyond the academic halls with several alumni voicing their concerns in local media.

“World class institutions are not built based on the decisions of politicians but by those within the institutions who spend a lifetime in their respective fields,” Beheruz Nariman Sethna, an IIM-Ahmedabad alumna, wrote in The Hindu newspaper.

While marketing consultant Rama Bijapurkar, a graduate of IIM-Ahmedabad and former member of its board, wrote in the Indian Express:

“This bill is the equivalent of calling for the nationalisation of all well-run factories today, setting the clock back to the mediocre place it used to be, and then going forth to conquer the world.”

Following the outcry, New Delhi has sought to calm the agitation. Government officials have said that the bill’s language would be reviewed to remove so-called inconsistencies before it is introduced in parliament, which may be see n as a tactful retreat.

Kiran Mazumdar-Shaw, chairwoman of IIM-Bangalore, also met Smriti Irani, minister of human resources development, last month, after criticising the bill, and subsequently tweeted to her 388,000 followers:.

“Had a fruitful mtg with @HRDministry to discuss n resolve issues around autonomy n accountability of IIM bill.”

Copyright The Financial Times Limited 2017. All rights reserved.
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