Regulatory Bodies in India
- What are Regulatory Bodies?
- Functions Of The Regulatory Body
- Important Regulatory bodies in India
- Role of Regulatory Bodies
- Regulatory Impact Assessments (RIA)
- Issues with Regulatory Bodies in India
- Suggestion for Regulatory Bodies
What are Regulatory Bodies?
- These are independent governmental bodies established by the government in order to set standards in a specific field of activity, or operations and then to enforce those standards.
- Regulatory agencies may or may not function outside direct executive supervision.
Functions Of The Regulatory Body
- Corrective actions
- Regulations and guides
- Review and assessment
Important Regulatory bodies in India
- Competition Commission of India
- Advertising Standards Council of India
- Reserve Bank of India
- Directorate General of Civil Aviation
- Press council of India
- Biodiversity authority of India
- Insurance Regulatory and Development Authority
- Forward Markets Commission
- The Food Safety and Standards Authority of India (FSSAI)
- Inland Waterways Authority of India
- Telecom Disputes Settlement and Appellate Tribunal
- Securities and Exchange Board of India
- Telecom Regulatory Authority of India
- Financial Stability and Development Council
- Central pollution control board
- Pension fund regulatory and development authority
- Medical Council of India
Role of Regulatory Bodies
- India liberalised industries in the 1990s and handed over sectoral governance to regulatory bodies. These bodies played a constructive role in ensuring the free and fair market.
- Post 1990, Privatisation saw the advent of the ‘Indian Regulator’ that became the ‘nurturer’ and ‘parent’ of its sector. The regulators incentivised private investment by giving them functional autonomy and shielding them from interference.
- Also, regulatory bodies have shown that empowered regulator can bring fruitful results:
- Steps taken by Reserve Bank of India (RBI) in tackling the liquidity crisis and management of increasing Non- Performing Assets (NPAs).
- SEBI has also been instrumental in taking quick and effective steps in light of the global meltdown and the Satyam fiasco.
- However, improper regulation or failure of regulatory bodies in smoothening the interaction between markets and the State may lead to a new crisis. For example,
- AGR issue: In October 2019, the Supreme Court demanded that telecom companies pay statutory dues worth ₹47 lakh crore to the central government.
- These dues didn’t pile up overnight but stem from a 15-year-old dispute over sharing of revenues between telcos and the government. A well-regulated industry would not be subject to such a large fiscal shock.
Regulatory Impact Assessments (RIA)
- Regulatory Impact Assessments (RIA) is a systemic approach to critically assessing the positive and negative effects of proposed and existing regulations and non-regulatory alternatives.
- As employed in OECD countries it encompasses a range of methods.
- It is an important element of an evidence-based approach to policymaking.
Issues with Regulatory Bodies in India
- Populist pressure: In India political populism often overtakes the economic agenda. This casts a shadow on regulation. There are constant interferences in the functioning of regulatory bodies by the ruling political parties. Eg, Interventions of government in the RBI functioning
- Selection of non- experts: The selection of non-experts to lead the regulatory bodies may bring lack of efficiency in the functioning of such bodies. Recently, this issue was raised when the former Finance secretary was appointed as RBI chairman.
- Inefficient review mechanism: The review mechanism of the functioning of the regulatory bodies under the aegis of parliamentary committees is not very robust.
- Recommendations made by Regulatory Authorities are rarely implemented.
- Presence of many regulatory bodies causes overlapping of powers. For example:
- Environment- Central Pollution Control Board (CPCB) and National GreenTribunal (NGT).
- Controversy between SEBI and IRDAI over Unit Linked Insurance Policy.
- Education sector- All India Council for Technical Education (AICTE) and University Grants Commission (UGC).
Suggestion for Regulatory Bodies
- Genuine functional autonomy would also have to be reinforced with financial autonomy by putting in place a system where regulatory organisations are not dependent on government departments for financial support.
- Regulatory organisations should undertake a self-evaluation of themselves once in a few (say three) years, and put out the conclusions in the public domain for informed discussion and debate.
- The appointment of persons to head regulatory organisations should be attempted in a far more transparent manner.
- Functional autonomy without corresponding accountability is a sure recipe for chaos. Thus, there is a need to make sure such bodies imbibe the ethos of transparency and accountability in the functioning of the bodies.
- Many countries have adopted techniques like “Regulatory Impact Assessments”. India can also mandate such techniques through legislation and thereby preserve economic value.
- Many studies suggest that Covid-19 has caused a huge economic loss and will continue to do so in the immediate future. Today, among many experts there is a consensus that we may be headed for not just a slowdown, but perhaps even a recession.
- Thus there is a need for empowered regulatory bodies which can steer regulations to make sectors of the economy robust and smoothly mitigate the economic impacts of the pandemic Covid -19.