BLOG: IIMs' fears of threat to autonomy may be exaggerated

T T Ram Mohan

The ministry of HRD is embroiled in yet another controversy involving the IIMs. This has been going on since 2004 when Murli Manohar Joshi, then HRD minister in the NDA government, wanted the IIMs to reduce their fee for PGP to Rs 30,000. Every time, there is a run-in with the government, the IIMs contend that their autonomy is under threat.

Thus, in 2007, the government advertised the post of director of IIMA. Faculty and alumni went to town saying this was a threat to autonomy! One would have thought that they should have insisted on the widest advertising and search for the post.

In 2005, IIMB wanted to set up a campus in Singapore. The then minister, Arjun Singh, stalled this, saying they needed to create more seats in India in the first place. IIMB claimed its autonomy was under threat. There was a huge ruckus. In 2010, Kapil Sibal called their bluff. He said they could go ahead. Nothing has been heard of the proposal since.

On another occasion, the government advised the IIMs to reduce their board size from an unwieldy 25 to around 15- a perfectly sensible suggestion. Again, the war cry of 'autonomy in danger' was raised before the proposal came to be accepted.

As somebody who has studied the history of IIMA and written about it, I find it strange that no chairman or director of IIMA complained about any threat to autonomy or lack of autonomy for nearly four decades until the early 2000s. That was a period in which IIMA and other IIMs were heavily dependent on government for funds- and yet there was no talk of government interference.

The IIMs began raising their demand for autonomy once they ceased to depend on government of funds- thanks, initially to burgeoning consulting income and, later, to steep increases in the fee charged for PGP and PGP-X. Some directors reckoned that since they were not taking money from government, there was no reason for them to be subject to government oversight or control. Going by this logic, ONGC and SBI should also be resistant to government oversight- not only are they not taking money from government, they hand in generous dividends!

Well, anyway, that's how the talk started and some of the IIMs articulated their position on autonomy through Position Papers. The leading IIMs, notably IIMA and IIMB, would like to become board-driven institutions, with the government only setting very broad objectives. All major appointments- the chairperson, board members and the director- would be done by the boards. The board would decide the fee. The board should also be free to delink compensation from government so that the IIMs could become globally competitive (a privilege not granted to ONGC or SBI, which are commercial entities).

It astonishes me that those who make these proposals should show lack of understanding of the legal position. There was report on the IIMs prepared by V K Shunglu, former CAG, in 2004. He said that the concept of autonomy espoused by IIMA was simply not supported by the Articles of Association of the Institute. Further, he cited a Supreme Court judgement that upheld the government's right to regulate admissions, fees and service conditions of employees even in private aided institutions.

If the IIMs come to be covered by an Act of Parliament, it will be even harder,legally speaking, for government to adopt the hands-off approach that the IIMs want. After all, the government is accountable to parliament. It is just not possible for the government to leave all matters, including matters of governance, to the IIM boards. The self-perpetuating board- with the chairperson and members being appointed by the board, as also the president of the university- is a feature that obtains in private universities abroad, not in public universities. In public universities in the US, it's the government that calls the shots on boards.

Legalities apart, there's the question of who will enforce accountability in the IIMs if the government were to withdraw. The IIM boards consist of people with little stake in the institutes. So when people say that matters should be left to IIM boards, they mean, in effect, that matters should be left to directors. That would mean an absence of checks and balances in the system- the last thing we want.

(The writer is Professor, Indian Institute of Management, Ahmedabad. His current research area includes banking sector reforms, privatisation and corporate governance, and he blogs at ttrammohan.blogspot.in)