The report of the third IIM Review Committee (IRC) headed by R.C. Bhargava, chairman of Maruti Suzuki India Ltd, which was submitted to the Union HRD ministry on September 27 last year, was made public recently. The brief of the four-member committee comprising Ajit Balakrishnan, chief executive of Rediff.com and chairman of IIM-Calcutta’s Board of Governors; Anusua Basu, retired deputy CAG; Ram S. Tarneja, former managing director of Bennett, Coleman & Co Ltd, and Ashok Thakur, additional secretary, department of higher education, Union HRD ministry, was to review the performance of the seven IIMs and suggest the way forward. Titled Negotiating the Big Leap — IIMs: From Great Teaching Institutions to Thought Leadership Centres, the IRC’s report has generated much debate and controversy with IIM-A, IIM-B and IIM-C rejecting its proposals for greater government control and supervision. The committee’s salient recommendations (verbatim):
Long term excellence of any institution is closely correlated to the quality of governance. Good governance requires that all involved should have clarity of roles, powers to execute the allocated tasks and accountability for results.
• IIMs have been established by the government with public funds, are perceived as public institutions and thus cannot expect to become fully independent of the government.
• At the same time there are several limitations inherent in government being directly involved in framing policies and strategies, and monitoring their implementation, to enable IIMs to become thought leaders and amongst the best business schools in the world. This task would become virtually impossible when the number of IIMs increases to 13.
• To assist the government in playing its role, it is proposed to create a Pan-IIM Board, consisting of 15 members. Five of these would be government nominees, and the rest would be eminent and highly successful individuals living in India or abroad, and willing to devote time to work on this board. The chairman should be nominated by the prime minister and the secretary of the board would be one of the five government nominees. This board should not be involved in day to day management of an IIM, but should approve vision and mission statements, give guidelines for framing policy, and approve two-year business plans. The board should review performance of each IIM once in two years, and advise government on all matters relating to the IIMs. Government should act only on the advice of this board.
• The Pan-IIM board should bring about coordination between all the IIMs in all areas where this would be beneficial. The establishment of the six new IIMs should be coordinated by the board. This board should also help in raising private funds for the IIMs.
• The governing boards of IIMs should be reconstituted and comprise 11 members against the present 24-26. Six of these would be independent professionals. The other five would be one nominee each of the Central government, state government, faculty, and the chairman and the 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 percent attendance.
• An attempt should be made to induct as many IIM alumni as possible, both in the IIM governing boards and the Pan-IIM Board.
• The governing boards of the IIMs should have full powers to select and appoint the director, propose the name of the chairman to the Pan-IIM Board, raise funds, fix fees for all courses, create or abolish posts, and determine conditions of service of all those appointed on a contract basis.
• The governing boards should ensure that the policy of ‘means-blind education’ is sincerely implemented. While bank loans would form the basis of financing education, IIMs should build an adequate scholarship fund to provide assistance to students. A transparent and objective scheme should be formulated for providing assistance.
• To overcome the faculty shortage situation, IIMs should appoint teachers on contract, use technology, increase output of Ph Ds, and rationalise the Fellowship programme.
• The MBA teaching programme should remain the core activity of IIMs, with adequate quality research being carried out. Income generating executive training programmes and consultancies should be balanced with the needs of teaching and research.
• All IIMs which are over five years old should be able to generate a small operating surplus. The fee for the MBA programme should be fixed after taking into account all other incomes, and the need to have a small surplus. This surplus should be used to partially fund new infrastructure, and also to build the scholarship fund.
• IIMs should first attempt to increase annual student intake for the PGP (postgraduate programme) to 750. This would enable achieving better economies of scale.
• Government may fund 70 percent of all new capex in the older IIMs. The rest should be raised by the IIMs. New IIMs would need to be fully funded by the government.
• Raising a corpus should be a prime objective of each IIM. Some changes to the tax laws may be required. The IIMs should have flexibility to be able to use the funds so raised, above a base level of Rs.50 crore, without any government approvals or controls.
• Existing IIMs should be actively involved in the establishment and management of the six new IIMs. The brand image of IIMs would be tarnished if these IIMs do not attain the same degree of excellence as the existing IIMs.
• The academic and administrative functions in IIMs should be separated. This would enhance efficiency and also give faculty more time to teach and do research. Much greater use of technology should be made in administrative functions.