The Hindu Business Line : Regulator facing staff crunch — Ministry shoots down TRAI proposal on funding

THE Finance Ministry has shot down a proposal from the Telecom Regulatory Authority of India (TRAI) to fund its operations from the licence fee collected from operators instead of the present system of receiving grants from the Government.

TRAI, in turn, now proposes to take up the matter again with the Government, possibly at a level higher than the Finance Ministry.

The funds crunch has put severe pressure on TRAI's manpower situation. While there are 140 posts in the organisation, only 110 are taken with the officers from the Indian Telecom Services cadre refusing to accept deputation to the regulatory body.

TRAI had suggested that the Government should give it 0.05 per cent of the revenues collected as licence fee from the operators.

Mr Pradip Baijal, Chairman and Managing Director, TRAI told Business Line that the Finance Ministry's stand was unfortunate. "In the absence of its independent source of funding, TRAI is not able to improve the service conditions of its employees and attract necessary talent to the organisation. The existing funding mechanism does not allow our employees to take all the benefit that accrues to government employees. This is putting off officers from other departments to take an assignment with TRAI," Mr Baijal said.

The proposal had the backing of the Ministry of Communication and IT. The TRAI Act provides for constitution of a TRAI General Fund in which grants received from the Government and other receipts in the form of fees and charges are to be credited.

"The provisions in TRAI Act provide legal authority to TRAI to frame regulations for levying fees and charges as a source to generate its own fund. An important underlying reason for providing regulatory bodies with the authority to levy fees and charges is to preserve their independence," said a TRAI official. According to TRAI, regulators in 72 countries are funded from licence, spectrum , numbering and regulatory fees.

In India, the Insurance Regulatory and Development Authority (IRDA) raises its revenue through cess imposed on premiums collected by insurance companies and fees imposed on all intermediaries as well as registration and annual fees to be paid by the insurance companies.

The Securities and Exchange Board of India (SEBI) is another regulatory body, which utilises the registration, listing and turnover fees it realises from brokers, merchant bankers, lead managers and other intermediaries.

"SEBI and IRDA are self-sustaining in the sense that they are able to generate adequate amount of revenue by virtue of the financial autonomy available to them," TRAI had said in its proposal. Currently, the annual expenditure of TRAI is about Rs 10 crore.

"As a matter of fact, it is for this reason that the international benchmarking for adequacy of regulatory structure in a country is whether the regulatory structure is independent of the Government for its funding," said Mr Baijal

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Regulator facing staff crunch — Ministry shoots down TRAI proposal on funding