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In a strongly worded letter to Finance Minister Nirmala Sitharaman, an association of SEBI employees has opposed a Budget proposal that seeks to transfer 75 per cent of the regulator’s surplus funds to government coffers, terming it an additional tax burden on market participants.
Also, the letter calls the proposal that necessitates SEBI seeking government approval for its annual expenditure regressive. BusinessLine has a copy of the letter.
In a similar letter written to the government in 2018, SEBI had protested over the surplus funds plans. SC Garg, then Secretary of the Department of Economic Affairs, had been quoted by PTI as saying that SEBI surplus funds should be kept in a public account rather than with banks.
Reserve fund
The Budget has proposed that SEBI should constitute a reserve fund, and 25 per cent of the annual surplus of the general fund should be credited to this reserve fund. Moreover, the transfer to the reserve fund every year should not exceed the total annual expenditure of the preceding two years.
After meeting all expenditures, SEBI should transfer 75 per cent of the surplus amount to the Consolidated Fund of India, according to the Budget proposal. A gazette notification to this effect will be issued after the Finance Bill is passed in Parliament. The Budget also proposed that SEBI should take government approval for its annual expenditure.
SEBI has a surplus of ₹3,170 crore per its 2017 balance-sheet, which is the latest available in the public domain.
Slow decision-making
“The involvement of the government in capital expenditure approval will not add any benefit to the institutional efficiency but rather slow down decision-making, and would be contrary to the principal of minimum government and maximum governance,” said the SEBI employees’ letter.
The letter reasoned that the Comptroller and Auditor General (CAG), which conducts an audit of SEBI accounts, has till date not found a “single instance of imprudence”.
Already, the capital expenditure plan of the regulator has to be approved by the SEBI board, which has two government nominees on it. The employees have asked the Finance Minister to ensure that the autonomy of SEBI is maintained.
“SEBI’s standing as an autonomous regulatory body will be compromised due to the proposed requirement of government approval for part of its expenses,” the letter said.
The CAG had earlier recommended the transfer of surplus funds from regulators such as SEBI and IRDAI to the Consolidated Fund of India.
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