I feel before we take such steps, one should do some statistical analysis. How many percent of the current students in IIT-M (say) have qualified in the top 2.5% (or 1%) of their board exams or have represented in the Olympiads? Is there a linear correlation between the marks obtained in the board exam and the CGPA obtained in IITs?
Professor Idichandy, who is looking into the reforms for JEE, feels that JEE and all entrance examinations should be abolished and this would lead to the collapse of the coaching classes. Tamil Nadu, for example, has abolished the entrance exams for admission to its engineering colleges. Guess what has happened? The coaching classes for 12th standard have sprung up and replaced the coaching classes for the entrance exam. The coaching industry is not going to disappear because JEE is abolished. It will just shift to another examination.
Currently, most of the examinations (board exams, several entrance exams) rely only on the student's ability to memorize and not understand concepts. Therefore, board examinations and, consequently, teaching in schools should change first. Maybe make all the board examinations open book exams.
Because the competition to get into IIT is unhealthy, the quantity and quality of NITs and other engineering colleges should be significantly improved so that people feel that not getting into an IIT is not a big deal.
Without doing any statistical analysis or implementing some reforms in board examinations, simply abolishing a well conducted fair examination may not be a good idea.