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Got a problem? Only a bureaucrat can fix it PDF Print E-mail
Saturday, 12 May 2018 00:00
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There has to be something wrong if, for even the banker’s slot in RBI, former bureaucrats are in the reckoning

 

Given the central role of banks in the economy and the fact that RBI’s main job is regulating/dealing with banks, it is not surprising one of its deputy governors is traditionally a career banker. So, when SS Mundra retired last year in July, several bankers were in the fray for the post. Apart from the fact that it is unconscionable that the post has been kept vacant for so long, it comes as a surprise that a panel headed by the Cabinet Secretary should have interviewed three senior bureaucrats for the job apart from six bankers. Surely the need for domain knowledge can’t be given the go-by so easily? A few weeks prior to this, when a new head had to be found for the insurance regulatory body—the last head was a former chief of LIC—it was a bureaucrat who got the job.

It can be no one’s case that a former insurance company head makes the best regulator, but while that person at least knows the industry, it is not immediately clear what qualities a bureaucrat automatically brings to the job.
India has had some outstanding public servants, and making one of them a regulatory body’s head would be great news, but appointing the average bureaucrat to the job essentially ensures status quo. Many chiefs of state-level electricity regulators tend to be former power secretaries or from other departments, and more often than not, their record has been anything but inspiring.

While the regulators’ job is to rationalise tariffs, most have tended to shy away from this, making it easier for the political establishment to do nothing, and the result was the lakhs of crores of rupees of debt that nearly bankrupted the sector. Indeed, while the Electricity Act provided for the introduction of competition, the state regulators tended to side with the state electricity boards to ensure this never happened. With a few exceptions, few bureaucrats have shone in their jobs as regulators, whether in telecom, hydrocarbons, etc.

That the government should still persist with them, of course, is ironical. Most sectors in India have traditionally been closed to the private sector and, as part of the liberalisation process, the regulator-cum-appellate-tribunal was seen as the perfect solution. A new regime of competition was to be ushered in under the regulator whose job was not just to ensure the private sector didn’t rip off consumers but was also to give private sector players a level playing field and freedom from onerous government regulations.

It has to be ironical that the same people who are responsible for stifling policy and who are trained to maintain status quo are being chosen to head the reshuffle of the sector even though, in their career, they have shown no ability to think/execute out of the box. Indeed, opportunities to bring in fresh talent are being frittered. The government would do well to keep in mind that its flagship game-changing programme, Aadhaar, was not delivered by a bureaucrat but by a private sector individual who thought out of the box.

 

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