Regulators rule PDF Print E-mail
Wednesday, 17 August 2011 00:00
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It is curious that while Prime Minister Manmohan Singh was quite categorical about introducing a public procurement legislation in Parliament by the end of the year, he was ambiguous about the proposed law on regulators. “We are also considering enactment of such a law,” the PM said while enumerating what his government planned to do about reducing discretion and corruption. It would also appear the PM seriously downplayed what the proposed Bill was all about. He said it would enable monitoring of regulators and make them more accountable “without, however, compromising their independence”. Since the only draft Bill on the subject is one by the Planning Commission, it’s not too clear if the PM was talking of this—this Bill is not so much about monitoring regulators as it is about empowering them in a serious manner. It is this empowerment that ensured the Bill hasn’t made any progress so far even though it was drafted way back in April 2009.

The telecom regulator, to cite one example, has no real powers except to make recommendations and the government can easily overrule it. Most recently, Trai recommended the cancellation of 74 licences but the telecom ministry has refused to accept this. What the Bill proposes is that all licensing powers, including compliance of the licences, will be with Trai and not with the telecom ministry—in the current context, this means there would have been no Raja scam since Trai would have had to come out with transparent guidelines on licensing. The regulator is to submit regular progress reports (this is where the monitoring comes in) to Parliament including those on any directions issued to it by the government. In the case of the electricity sector, similarly, the regulator would have to explain why tariffs have not been raised while input costs are spiralling—in the case of Delhi, regulatory slumber has meant overdues to distribution companies are a whopping R8,500 crore! Such powers for the electricity regulator, or an airport one, would ensure the ministries didn’t come up with the sort of post-tender changes that have been allowed in several cases. There are some obvious shortcomings in the draft Bill—the government’s power to dismiss regulators is quite extreme—but these are easily fixed. If the PM can overcome the objections of his Cabinet colleagues to introduce this version of the regulatory Bill, this will be UPA-2’s first big reform.


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