Power to regulators PDF Print E-mail
Monday, 16 December 2013 01:28
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Indian Express editorial

But lessons must be drawn from the limited experiment of empowering them so far.

Given that the government hasn't been able to muster the courage to bring its regulatory reform bill to Parliament for the last four years, it is difficult to see how it will happen this time around, though the bill is now to be circulated among ministries for their comments. At its heart, the bill seeks to take away from ministries the discretionary powers to award and cancel licenses, and plans to give them to professionally run regulatory commissions which, as is the case today, will have appellate tribunals to ensure that those unhappy with the decisions get a chance to appeal them. Since regulatory orders are written down, appealing them is possible. In other words, if the government is able to convince the political class to give up its discretionary powers, this is the best decision-making can get. Had such a transparent system been put in place, arguably many of the scams of the past, from 2G to "coalgate", may not have occurred. Regulators would, under the new dispensation, report directly to Parliament, convey any direction given to them by the ministry, have their own budgets and, no, the telecom secretary wouldn't automatically become the telecom regulator.

The problem, however, is that it is by no means certain that even the limited experiment with regulators has delivered. In telecom, empowering Trai is a great idea, but there are enough instances in the past when the regulator has delivered exactly what the government of the day wanted, and that includes the A. Raja period. In the power sector, the regulators at the level of the states have by and large functioned as an arm of the state.

The Electricity Act 2003 laid down the principle of introducing competition through what is called "open access" but state electricity boards found ways to thwart it. In the case of power tariffs, the regulator's job was to ensure that tariffs got hiked regularly to take care of rising costs, that state governments paid their subsidy dues regularly. When the last bailout package was being formulated some months ago, however, it became clear that regulators had connived in piling up IOUs of Rs 80,000 crore to private distribution companies, and in other cases legitimate dues were not even recognised and so put off for another day. While reforming and empowering the regulator is essential, ensuring genuine autonomy for it will be a long haul.


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