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When regulators get restive

By A K Bhattacharya
August 06, 2003 11:38 IST
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Regulators are in the news. As their numbers increase, some of them are beginning to realise their immense power and daunting responsibilities.

With such realisation has come a desire in them to demand more functional autonomy. They fear that without that freedom they cannot fulfill their responsibilities. But the government continues to behave like a spoilsport. It is not letting the regulators to be on their own.

The latest instance of a regulator to come under government pressure is the Central Electricity Regulatory Commission. Transgressing its brief, the power ministry has set out detailed tariff guidelines for CERC to follow, instead of just outlining a broad tariff policy.

Even before the detailed tariff norms were made public by the power ministry, state electricity regulatory commissions had made no secret of their opposition to the government move. They wrote letters to the power ministry questioning the government's suggestions.

Now it seems, CERC too is going to take on the government. It has decided to make public its point-by-point rebuttal of the norms suggested by the power ministry. And what better means to do that than the use of its website!

So, if you want to know what the country's apex power regulator thinks of the government's views on tariff policy, check out www.cercind.org. It will be interesting to see how in the coming days this battle between CERC and the power ministry unfolds.

It is going to be a peculiar battle. The current power secretary, RV Shahi, who is the author of the detailed tariff guidelines, was once upon a time a preferred candidate to head CERC.

At that time, the current CERC chairman, Ashok Basu, was the power secretary. But Mr Shahi (then he was heading the private sector power giant, BSES) declined the offer.

The chairmanship of CERC thus remained vacant for almost about a year after S L Rao quit in early 2001. And then Mr Basu was offered the job immediately after he retired as the power secretary.

So, one wonders how Mr Shahi would have reacted to the power ministry's detailed tariff norms if he had remained in the private sector or if he had accepted the power regulator's job. And whether Mr Basu is realising at his own cost how the government and its bureaucrats conspire to throttle independent regulators' initiatives.

Regulators in other sectors, however, are having a relatively tension-free run these days. Take the regulator in the telecom sector, Pradeep Baijal.

A retired IAS officer, Mr Baijal is not having any problem with the ministry of communication. In fact, Mr Baijal and the communications minister, Arun Shourie, enjoy a very good rapport. Let alone any conflict, the telecom regulator has consistently functioned in complete harmony with the government.

The latest regulator, the Competition Commission of India, too has given enough indication that it would not like to fall foul of the government.

Its chairman, Dipak Chatterjee, is yet to take charge, although its member, Vinod Dhall, has begun work in right earnest. Remember that both Chatterjee and Dhall are IAS officers.

Recently, Mr Dhall held a meeting with experts on how the new regulatory body should go about its job. And the impression that many of those participants got from the tenor of the discussion that day was that the new regulator was yet to get out of a mindset of a government department.

That is not surprising. Mindsets take some time to change. As long as retiring IAS officers continue to head the regulatory bodies, the government need not worry about any conflict with the regulators, at least within the first few months of their appointment. The problems will start only when the retired IAS officers have spent about a year or two in their new jobs as regulators.

G V Ramakrishna as the chairman of the capital markets regulator, Securities and Exchange Board of India, took on the finance ministry not before he spent a few years in the job.

N Rangachary (although he was from the Indian Revenue Service) also challenged the might of the finance ministry only at the fag end of his tenure as chairman of the insurance regulatory body. And Ashok Basu has rightly begun flexing his muscle only after completing a year as CERC chairman.

So, if you want to see Pradip Baijal, C S Rao (the newly appointed insurance regulator) or Dipak Chatterjee chart an independent course, unmindful of whether that path is in conflict with the government's line or not, you may have to wait for them to complete at least a year in their new jobs.

Since the government shows no sign of changing its policy of appointing only retiring IAS officers as regulators, that perhaps is your only hope to see at some point of time an independent regulator, strong enough to retain his functional autonomy.

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