The Telegraph
Since 1st March, 1999
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Move for three multi-sector regulators

New Delhi, Oct. 8: The Congress-led government is planning to set up multi-sector regulators covering three key sectors: communications, including telecom and broadcasting; electricity, fuels and gas; and transport, including air and rail transport.

The move will put the lid on the clamour for a plethora of regulatory authorities.

The government would also like to streamline the country’s economic regulatory laws by not only cutting out the multiplicity of regulatory authorities but also making uniform and transparent regulatory laws that could be applied to all sectors.

In a note prepared by the Planning Commission for Prime Minister Manmohan Singh, the government says India should consider opting for multi-sector regulators in the three areas. “This would eliminate proliferation of regulatory commissions, help build capacity and expertise, promote consistency of approach and save on costs,” says the note.

The overhaul of the regulatory mechanism is being planned after the Prime Minister voiced concern on regulatory issues in internal meetings with his economic advisers and ministers.

The note, which is being circulated to key ministries, says states could consider a single regulatory authority for all infrastructure sectors. This could be achieved by expanding the “scope of their existing electricity regulators”.

The note is likely to set the cat among pigeons as many of the ministers are known to oppose such multi-sector regulators who could cut into their influence on individual regulators. In fact, some ministries such as civil aviation are known to oppose the very idea of any independent regulator in their domain.

Plan panel advisers say the regulatory framework in infrastructure has developed autonomously within each infrastructure sector with “very little co-ordination or cross-fertilisation of ideas across sectors”.

There has been an uneven spread of the regulatory mechanism across the industrial landscape. In some cases, there are independent regulators as in the electricity sector while in others, government officials act as regulators. In some other sectors, government firms serve as regulators. Several sectors have no regulators at all.

The electricity regulator enjoys extensive powers including rule-making, licensing, enforcement, and imposition of penalties. At the other end of the spectrum, the port sector regulator only sets tariffs with restricted powers. The telecom regulator is supposed to promote competition while the electricity regulator has no such charge. The selection process, tenure of office and qualifications all vary for various regulators.

“All this creates a confusing scenario which does not show our regulatory mechanism in a good light before the world,” officials said.

“Increasingly, energy companies are becoming multi-product giants involved in petroleum and gas drilling and transportation, coal mining as well as electricity generation. Similarly, telecom companies are also entering cable television and Internet. A plethora of rules and a multiplicity of regulators for such integrated sectors would only create confusion,” they said.

The new regulatory environment will not only seek to create integrated regulators but also seek to separate the rule-making and rule administration powers that a regulatory authority has from the judicial functions that it often discharges.

The concept note says, “The regulatory institution would essentially perform the erstwhile role of a government in making rules and enforcing them through licensing ... however, the adjudicating tribunal (will be separate and) must be headed by a judicial member.”

It also goes on to point out that the regulatory authorities tend to be governed by the ministry as they have been made accountable to them. To safeguard their independence, the new concept prefers to make the regulators directly accountable to Parliament.

“To make the independent regulatory agency democratically accountable, three modes of responsibility need to be established. First, the regulator needs to be directly responsible to the legislature through periodic reports to the legislature. While the ministry will continue to be responsible for the policy objectives and guidelines they set, the regulator should be directly responsible to the legislature for the way in which it chooses to administer the policy,” the note says.

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