The Hindu Business Line : CII moots sectoral regulators for infrastructure

THE Confederation of Indian Industry (CII) feels that independent regulators for different sectors in infrastructure are needed rather than a unified regulator for the entire sector. However, as a prerequisite for sectoral regulators, the Centre must first lay down the ground rules.

The CII presented its views to the Union Planning Commission when it also discussed the need for a regulatory legislation for infrastructure. While some sections feel that an umbrella regulatory authority — as prevalent in some developed economies — for the infrastructure sector is needed, the CII believes that the Indian market is so complex that the purpose will be better served if there are different regulators for different sectors in infrastructure.

"Our plea is that Indian market is so complex, the historical backlog is so high, the issues are so complicated, the task is so huge" that one regulator will find it difficult to ensure justice is done, Mr Vinayak Chatterjee, Chairman, CII's national committee on infrastructure, told Business Line.

"Different sectors require different regulatory authorities for different reasons," he added.

However, the Centre should first create an enabling framework for these independent regulators to function.

The ground rules will have to specify how the regulatory authorities will be created and run, how the chairmen and other members will be selected, how they will be remunerated, how independent the chairmen will be, and how and to whom will the regulators be accountable.

"We have suggested from the CII that the government must first go ahead with an enabling umbrella legislation that will cover all these aspects and one that mandates specific sectors to have regulatory authorities," Mr Chatterjee, who is also chairman of Feedback Ventures Pvt Ltd, an integrated infrastructure development company, said.

Along with the sectoral regulators, the Centre should constitute a national infrastructure appellate tribunal, which will be the first court of appeal against decisions of any of the regulators.

The final appeal should be to the Supreme Court on substantial questions of law.

The Centre, according to the CII, should enact an infrastructure regulatory framework legislation that will mandate and guide relevant ministries to formulate suitable regulatory strategies taking into account issues like the extent of competition, extent and need for private sector participation in that particular sector, and level of commercialisation.

The legislation could cover all areas: telecom, broadcasting, electricity, oil and gas, civil aviation, ports and national highways, with the Railways, urban transport, water supply and sanitation also being brought under its coverage in due course.

Mr Chatterjee said that if the Centre was really serious in attracting large amounts of private capital into infrastructure, then a strong and independent regulatory regime was an absolute necessity.

Citing the example of the insurance sector, where an independent regulator ensured competition among new entrants and between the established players and the new entrants, he said regulatory authorities helped attract private capital.

"Even if there is no private capital, regulatory authorities ensure sector governance," he said. The regulators must be empowered to perform and be held accountable.

The CII has also suggested that a national institute for regulation in infrastructure be created under the stewardship of the Planning Commission. This will facilitate training and improving skills of regulators and staff of utilities and other stakeholders.

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