Are regulatory bodies solving the purpose they were created for? Scrutinize the shortfalls in them and suggest measures for a transparent and accountable regulatory regime.
Refer - Business Line
IAS Parliament 7 years
KEY POINTS
· In 1991 India transitioned to ‘market driven’ economy.
· Government’s role transformed from positive intervention to the regulation.
· To assist government in regulatory matters, regulatory bodies had been created.
Role of Regulators
· To set the policy agenda
· Outline regulations
· Punish non-compliance and
· Mobilise resources to manage affairs.
· The ultimate objective of the regulatory bodies’ is to frame policies that support the development of the market. But, various issues in regulatory bodies’ functioning resulted in diversion from its original objective.
· Some of the examples for regulatory bodies are RBI, SEBI, IRDA, PFRDA, TRAI, CCI, etc.
Shortcoming of Regulatory bodies
· The selection of non-experts to lead the regulatory bodies led to regulatory measures being over crowded by protective approaches.
· The review mechanisms of the functioning of the regulatory bodies, including parliamentary committees are not very robust.
· It does not include the role of the regulators in ensuring the development of the market.
· Substantial power to make laws has shifted from elected representatives to unelected technocrats circumvents democratic governance.
Suggestions
· Government has to institutionalise the review mechanism of the functioning of the regulatory bodies.
· Their track record needs to be assessed in areas such as
1. regulating the market,
2. protecting the interest of investors and
3. development of the market.
· Government should consider appointing a high-level task force immediately to delve deep into these issues and recommend a path to pursue so that the shift to regulator becomes an effective facilitator.
· To review the accountability frames of the regulatory bodies, assessed from,
1. Giving reasons for decisions,
2. Exposure to public scrutiny,
3. Possibility of independent review and
4. Costs benefit analysis.
