Rajesh Kumar (name changed) faced an unexpected problem when he was in race for a senior management position in a Europe-based multinational in 2005. Despite having the requisite experience and qualifications, including a management degree from a prestigious Indian Institute of Management (IIM), the company favoured another candidate with an international MBA degree. The problem arose primarily because IIMs used to offer a two-year Post Graduate Programme (PGP) in Management and not a formal MBA degree. They were also not empowered to offer PhDs and gave those finishing doctoral studies the title of a Fellow instead.
That was then. Students who have passed out of IIMs starting 2019 are not likely to face the problem. The IIM Act, cleared by President Ram Nath Kovind on the last day of 2017, makes each of the 20 IIMs 'Institution of National Importance', just like the IITs and NITs, and empowers them to grant degrees.
"There were problems. These diplomas and fellowships are recognised by companies and universities abroad. Many American universities that have collaboration with India name their courses PGP. However, some companies and universities not familiar with India might ask for equivalency and students might need to explain and produce equivalency certificates," says a faculty member from IIM Kozhikode.
Why did this happen? When the first IIMs were set up in 1961, they were registered under the Societies Registration Act and so could not award degrees. Students were awarded a PGDM. In India, only universities approved by the Universities Grants Commission can award degrees.
So, what does the Act mean for both IIMs and their students?
There are three big gains for IIMs. First, they are now granting MBA degrees and doctorates. Second, and most importantly, the Act gives functional autonomy to IIM boards, restricting government role. Prior to this, appointments had to be cleared by the Ministry of Human Resource Development (now called the Ministry of Education). "What this means is that it is now possible for an IIM, among other things, to ensure continuity of leadership. When there is a gap between one director taking over after the incumbent moves on, it is the institute that loses," says Bhimaraya Metri, who was Director at IIM Tiruchirapalli till quite recently. Now, the board can take recruitment decisions quickly without approval from the ministry. Third, the Act helps institutions by giving them freedom to innovate and improve standards by revamping the curriculum or tying up with foreign universities.
The IIMs will follow the autonomy template pitched by the PMO with the government staying away from selection and removal of chairperson and director, fee regulation, student intake, expansion plans and any other overriding powers that the Ministry of Education has retained over other institutes.
Says Priyanka, a student from IMT Ghaziabad: "MBA and PhD degrees are more accepted worldwide. They are aligned with the international nomenclature of business management degrees. While the market did recognise PGDM from IIMs to be equivalent, the confusion, if any, among employers will be settled." A professor at a Chennai-based B-School says, "Awarding degrees will definitely add to the prestige of IIMs."
But challenges remain. Daphne Anand, CTO, IndiaFilings, says, "Although the Act offers IIMs full autonomy, they are fully accountable to the government of India in certain areas. IIMs' accounts will be audited by the Comptroller and Auditor General of India." The Union government will notify an IIM Coordination Forum which will function as an advisory body headed by an eminent person. Even though directors will be appointed by the boards, the central government may frame rules with regards to their powers and duties. Considering that a lot of collaboration is needed, the transition will be time-consuming and challenging.
These are early days as far as transition is concerned. But one thing is clear. IIMs have got more autonomy and students will gain as they will get full degrees. And that's the best thing that can happen to both at a time when B-Schools across the world are facing multiple challenges in the aftermath of the pandemic. But there is a price to this in the form of higher fees as IIMs do not need government approval for fee increases now. But, then, there is a price to be paid for quality education.