The IIMs, India’s premier management schools, are centrally-funded. But for decades, many of them had been clamouring for more autonomy. That year, their wish was partly fulfilled—Parliament passed the Indian Institute of Management (IIM) Bill, effectively freeing the elite B-schools from government interference.

Javadekar said that from then on, the IIMs would be “board-driven, with the chairperson and director selected by the board”. But the truce between the government and the IIMs started unravelling sometime in 2018. And today, the same government that had imposed faith in the autonomous running of the IIMs in 2017 now swung the other way.

The beginnings of the fracture can be traced back to a case filed by Amitava Choudhury, a right to information (RTI) activist, and other people, challenging the appointment of Dheeraj Sharma, the director of IIM Rohtak, in the Punjab and Haryana High Court. The petitioners alleged that there were many discrepancies in the appointment of Sharma to the institute’s top job. Sharma, they held, did not meet the eligibility criteria required for the job (more of this later).

Over the next five years, the fracture worsened. The government became a party to the case and the legal dispute continues to this day.

This dispute, however, was just one of the inflection points in the government wanting to claw back control over the premier institutes. A few more battle fronts have opened up recently—over the swift exits of IIM Calcutta’s directors, the high fees charged to students, and the appointment of teachers. Things could be better with more government oversight, India’s ministry of education believed.

In August, the Lok Sabha passed the Indian Institutes of Management (IIM) (Amendment) Bill 2023. The new Act makes the President of India a ‘visitor’ to the IIMs. The visitor may appoint one or more people to review the work and progress of any institute, hold inquiries, nominate the chairperson of the board of governors in all IIMs, and oversee the appointment and removal of directors.

Education minister Dharmendra Pradhan told Parliament that the Bill was meant to bring in “management accountability” at the IIMs, and in the same breath emphasised that the government had “no intention of interfering with their autonomy”. But he pointed out the lapses as well. “Over the past three-four years, it has been observed that these institutes did not comply with several constitutional obligations—such as providing reservations to backward categories during the appointment of teachers or being accountable to the government’s General Financial Rules (GFR) as well as its service conduct rules. These things have not been followed,” Pradhan told the Parliament.

GFRs are a compilation of rules and orders issued by the government of India. Any entity has to follow these rules while dealing with matters involving public finances.

While the government said that it doesn’t want to “interfere”, some IIMs suspect the worst. They are afraid that in the garb of keeping tabs, the government will interfere in their efforts to mould global business managers. At some level, perhaps the IIMs have only themselves to blame for finding themselves at this sorry pass, given the allegations of lapses at some of the institutes.

The Rohtak row

An IIM director is appointed from a panel of names recommended by a search-cum-selection committee constituted by the board. The chairperson of the board is also the chairperson of the search-cum-selection committee. Others in the panel could include administrators, industrialists, educationists, scientists, technocrats and management specialists. The nominated names are then sent to the Appointments Committee of the Cabinet, which usually gives the nod to the first person picked for the job. In case that does not work out, the next shortlisted candidate is selected. The government, therefore, is part of the decision-making process. Its representative is part of the board that appoints the selection committee.

So, what sparked the dispute over the appointment of Dheeraj Sharma as the director of IIM Rohtak?

According to court papers accessed by Mint, an advertisement for the director’s post for IIM Rohtak was put out in 2015. The advertisement carried a list of eligibility criteria. One of the prerequisites was “outstanding academic credentials throughout, including a Ph.D. degree from a reputed institution with first class degree at bachelor’s and master’s level”.

When Sharma was picked as one of the nominees, he submitted soft copies of all the documents required in March 2016, including a bachelor’s degree certificate from Delhi University and a masters’ certificate from Agra University, according to a writ petition filed by his lawyers, Vibhav Jain and Uday Agnihotri, in the high court of Punjab and Haryana. The following month, Sharma handed over the hard copies of the documents to the secretary, department of higher education, who was then a member of the search-cum-selection committee and was on the interview panel, the petition stated.

Further, the petition stated that the government’s department of personnel training checked with the education ministry if Sharma met all the criteria. In 2017, he was appointed as the director for a five-year term, after all the boxes had been ticked.

Within two years, trouble started brewing for Sharma. In 2019, two employees of IIM Rohtak, who according to the court papers, were retrenched by Sharma for “inefficiency and incompetence”, filed a petition in the Punjab and Haryana high court seeking his removal from office. The petition claimed that the director did not have the documents required for the post and that he didn’t possess a first class degree.

Meanwhile, the position of director opened up again in 2021, after Sharma completed his five-year term. He reapplied, and was appointed for a second term, as per the rules of the Indian Institute of Management Act, 2017. The Act had been in force from 31 December 2017 and, according to Sharma’s lawyers, a first division at the bachelors’ level was not a prerequisite under the new rules.

Nonetheless, the legal battle dates back to his first term when a first division was essential. In March 2022, the government told the court that the director had never submitted his documents, and therefore, had concealed his qualifications.

The government also issued a show cause notice to Sharma on 28 March 2022. “… Whereas you joined as Director IIM Rohtak on 15 March 2017 thereby continuing to misrepresent your educational qualifications and concealing the fact that you do not possess a first class degree at bachelor’s level, which was a prerequisite for the said post,” the notice from the ministry of education, reviewed by Mint, stated.

The government further stated that Sharma had not heeded requests to submit self-attested degree certificates.

However, according to Sharma’s lawyers, all the documents the government had sought had been submitted. Sharma did not respond to Mint’s queries, sent on his official email ID.

Even if one assumes that Sharma’s first-term appointment fell through the cracks, why was the second term granted, wondered Bakul Dholakia, a former director at IIM Ahmedabad. “One cannot ask for autonomy without accountability,” he told Mint.

The legal case is far from over but observers said that this controversy caused the government considerable embarrassment.

Exits at IIMC

The second controversy involves IIM Calcutta. The institute has had two directors quitting in quick time because of a clash with the board and its chairperson, Shrikrishna Kulkarni.

“Uttam Sarkar put down his papers before his term got over. Before that, Anju Seth did the same. Why were no reviews done by the board when director after director is resigning,” asked Dholakia.

Seth was appointed the director of IIM Calcutta in 2018 and quit in 2021, before her term ended. She held the position of Pamplin Professor of Management at Virginia Tech, US, and prior to joining Virginia Tech, she was a professor of business administration at the University of Illinois. Seth completed her Ph.D. from the University of Michigan and has an academic career spanning over 25 years.

“We are delighted that Anju will be the first woman director of IIMC. She was the unanimous choice of the search cum selection committee and the BOG (board of governors),” Kulkarni had said in a statement when she was appointed.

Announcing the appointment of Uttam Kumar Sarkar as director of IIM Calcutta, Kulkarni wrote: “He articulated in the clearest terms an understanding of what needs to be done and how it must be done to help IIM Calcutta achieve its global aspirations. To this end, he presented a compelling and pragmatic agenda for his term as director. He appreciates and understands the complexities of the role and the expectations.”

Sarkar was appointed director on 18 August 2021 but quit earlier this year. Like Seth, Sarkar also never completed his term.

IIM Calcutta did not respond to Mint’s queries. Neither did Sarkar, who was approached for comments through LinkedIn. Mint wasn’t able to get in touch with Seth. The director’s message page on the institute’s website remains blank.

Is a visitor needed?

The government resolved to have better oversight and this led to the IIM (Amendment) Bill. The amendments have been welcomed by some academics, too.

“IIMs have done well for more than four decades when they were under government control,” said Ram Kumar Kakani, director of IIM Raipur. “This is a welcome step aiming to improve supervision and accountability, both of which are essential components of effective institutional governance,” he added.

But there are others that fear the quality of education will be impacted. “A political motive is to maximize votes. And that of an institution like IIM is to maximize learning. A government looks at equity as a driver, while IIMs look at excellence,” said the director of one IIM, who did not wish to be named. “Just because a few went rogue does not mean we should all get blamed,” he contended.

“Having a visitor in an IIM is not needed. Too many ceremonial positions only create pathways for governments to intervene,” said Pankaj Chandra, a former director of IIM Bangalore. He is now the vice chancellor of Ahmedabad University.

“In fact, we should do away with the position of a visitor for Indian institutions. The selection committee always had members from the government and if there was any issue, they had every right to discuss it within the board,” he added.

Culture fears

Less autonomy could potentially erode a B-school’s culture, fear some academics. “The bureaucrats do not understand that the culture of each IIM is different and it is essential to have a board that understands it and plays the key role in selecting the best leader, someone who can address the needs of that institute,” Chandra told Mint.

‘Culture’ isn’t very easy to define. It roughly translates to understanding the strength and weaknesses of an IIM, where it stands globally, why students would select it over other IIMs, the unique specializations that it offers, and the expertise the faculty brings in.

For instance, IIM Calcutta is regarded as a leader when it comes to grooming future executives in finance roles. IIM Ahmedabad, on the other hand, is known for the teaching of strategy. The selection of the teaching faculty, therefore, has to be finetuned as per the needs of each IIM.

There are also concerns around IIMs losing their connect with alumni. On 24 October, Hindustan Times reported that an independent expert committee that reviewed IIM Ahmedabad has listed key challenges faced by the institute. The committee criticized the IIM for changing its logo and demolishing dorms without consulting its alumni. “The review panel, without naming anyone, said the institute director should be first among equals rather than an all-powerful CEO,” the report mentioned.

Battle of fees

There is one niggling issue that many professors, directors and IIM board members talk about—a comparison with the Indian Institutes of Technology (IITs). There are 23 IITs today offering engineering and masters courses to batches, in numbers ranging from a few hundred to the thousands. They are government funded, and unlike the IIMs, are not exactly known for asking hard questions around autonomy.

“The IITs are among the best colleges in the world. They do not complain. Then, why should the IIMs?” asked a government official, who didn’t want to be identified. “Do we have a choice in who our boss is? No. So, why should IIMs be given that option? Their authority has not been snatched away. Why the fear?” he questioned.

The education ministry did not respond to Mint’s queries.

While the IIMs are Centrally-funded business schools, some of the older ones no longer rely on government funding to run operations. They are self-sufficient, generating enough money through fees, project work sourced from the industry, and alumni grants. There are seven first-generation IIMs—Calcutta (established in 1961), Ahmedabad (1961), Bangalore (1973), Lucknow (1984), Indore (1996), Kozhikode (1997) and Shillong (2007).

The younger IIMs, such as Rohtak, were established from 2009 onwards and are still reliant on government funding. Overall, there are 21 IIMs today.

With funding comes the question of fees and this is another battlefront between the IIMs and the government. While the IITs charge about ₹8 lakh for a four-year engineering programme, a two-year MBA degree at an IIM can cost ₹30 lakh.

“Our students are heading abroad for management courses because of the high fee structures in IIMs. Going ahead, the IIMs may have to relook at the fee structure,” said the government official quoted earlier.

According to a senior faculty member at one of the older IIMs, the higher fee structure helps in getting good faculty, provide better infrastructure, and run the institute without the support of the government. The person didn’t want to be identified.

“By talking about IITs and IIMs in the same breath, the government is homogenising these two institutions. The IIMs have ranked among the top institutes for higher studies in the world and that happened after decades of work done by highly qualified subject experts as faculty members. They need to be paid well,” said a senior professor at one of the top IIMs. The professor did not want to be identified, either.

The larger fear: if there is a re-look at fees and a cap, going ahead, the eventual impact will be on the quality of student output. The government, however, may not be in the mood to relent. That’s because a few bad eggs in the system may have queered the pitch.