The Hindu Business Line : Jaswant for strengthening regulatory mechanism

The Union Finance Minister, Mr Jaswant Singh, lighting a lamp to inaugurate the 15th All India Conference of Chartered Accountants as Mr N.D. Gupta, former President, ICAI, looks on in the Capital on Friday.

NEW DELHI, Jan. 3

THE Finance Minister, Mr Jaswant Singh, today said that there was a need to redefine the role of not only the Government, but even that of the regulatory authorities, in the changing economic environment.

"The freer the markets are, the stronger should be the regulatory mechanism. There can be no reform in the absence of such a mechanism. But strong regulation does not mean being governed totally by the rule-book. There should be a combination of self-governance and the rule-book," he said, while inaugurating the 15th All India Conference of Chartered Accountants here.

It was in this context, Mr Singh said, that the Government had set in motion a number of steps to strengthen the regulatory mechanism to "repair market failures". These included changes in the Securities Exchange Board of India (SEBI) Act and appointing the Naresh Chandra Committee to look into auditor-company management relationships.

The Finance Minister noted that in the pre-reform era, where the economy was relatively closed and free market operations were limited, there was less risk and whatever risk existed was shared between companies and the Government. But now companies are exposed to greater risks due to fluctuations in interest rates and exchange rates, financial derivatives, commodity prices and composition of currency and markets.

"Chartered accountants have a major role to play in the new financial architecture. They can help companies improve corporate governance through strengthening of management information systems, asset liability management, measurement, monitoring and management of risk, project appraisal and post-evaluation, performance and quality audit and prediction of sickness," he added.

Mr Singh also pointed out that the recent financial problems involving leading US companies such as Enron and Worldcom indicated that there was enough scope for improvement in the integrity of the accounting and auditing profession.

`Speedy sell-off of PSUs'

The Finance Minister hinted at speedy sell-off of public sector undertakings in the coming months.

"The Government should withdraw from sectors where private participation is more productive and more efficient. The scope of the Government remains largely in social sectors and infrastructure, for the Government is the ultimate risk taker," he stated.

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