The Hindu Business Line : Govt plans review of regulatory systems

THE Government plans to take a re-look at the issue of independent regulators which have been set up in those segments of the economy where both public and private sector companies operate.

The review has been necessitated by the fact that, apart from the existing ones, a host of new regulators are to be established, as in the case of the civil aviation and petroleum sectors.

Moreover, with the creation of the Competition Commission, the role and functions of the regulators need to be redefined since some of the regulatory boards have proposed overseeing mergers and amalgamations (M&A) in their sectors. Since M&As have the potential to distort competition, the Competition Commission believes such matters should be within its jurisdiction alone.

According to official sources, it has become necessary to review the regulatory system that has evolved and see what changes can be brought about to bring the Indian regulatory structure in line with international best practices.

A decision on whether there should be several separate regulatory bodies, with their own appellate structures, or some aggregation is possible, must also be taken, the sources said.

The first turf war broke out when the Insurance Regulatory and Development Authority of India wanted to oversee the pension business as well. There was some backing for this proposal since it was felt that many players could be common to the two fields.

However, the Government finally decided to have a separate regulator for the pension sector, and a legislation for the creation of the Pension Fund Regulatory and Development Authority is likely to be placed before Parliament when the budget session resumes after recess.

Even now, there are jurisdictional problems among existing regulators. Matters have even reached the courts for resolution, as in the case of the Telecom Regulatory Authority of India (TRAI) and the Telecom Dispute Settlement and Appellate Tribunal.

TRAI has been given the responsibility of regulating matters that fall under the jurisdiction of the Information and Broadcasting Ministry, and the authority is currently adjudicating matters relating to cable TV operators and FM radio.

There is also the issue of funding of the regulatory bodies, as there is no uniform system currently. The regulatory bodies are funded in different ways.

The review of the regulatory system is likely to be undertaken by the Planning Commission, which will be asked to draw upon international experience and suggest appropriate changes in the Indian system.

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