The government is crazy. IIT brand has been built over a period of time. You can't just name another institute IIT and assume that it will be of the same quality. This is just diluting the brand.
If you have to get quality institutes, improve the quality of RECs. Ensure that the students get quality education so that they can compete with IITs and prove that they are as good. Just naming them as IIT will not improve their quality. It will just reduce the quality of the IIT brand.
In US, they din't name every university Harvard. They created a Stanford and a Wharton, which competed with harvard.
Create institutes and let them make a name for themselves instead of banking on an already established name.