Citizens' Issues
Regulate the Regulator, Say Consumer Bodies
As India celebrates 25 years of economic liberalisation, there is a growing demand that a series of independent regulators, spawned by liberalisation, are themselves in need of regulation. These regulators were expected to develop markets, frame practical regulation that was in step with technological advances and changing needs of people. Instead, they have turned into giant bureaucracies and sinecures for retiring IAS officers and perpetuate the same stifling red-tape as government departments. 
 
In 2015, NITI Aayog put out a draft law to regulate the regulators, which aimed at “a uniform national framework for orderly development of infrastructure and protection of consumer interests.” This is a welcome objective because the focus seems to be on protecting consumers, who are the largest stakeholders in any society. In contrast, the United Progressive Alliance had attempted to create a statutory framework, ostensibly to resolve turf battles between financial regulators but, in effect, it encroached on the autonomy of these bodies. One may recall a spat between the capital market and insurance regulators about oversight of ULIPs (unit-linked insurance plans) in 2010 that triggered this move. Eventually, the move was dropped and our ‘independent’ regulators not only continue to enjoy full autonomy but also get away by exercising it in the most capricious manner. 
 
What is worse, most regulators, especially in the financial sector, are so engrossed in framing cumbersome new rules to regulate intermediaries that they have no time to worry about protecting investors or consumers. NITI Aayog’s proposal to segregate the judicial and non-judicial work of regulators, and to create a framework for appointing the chairman and whole-time directors, is the first step in ensuring the appropriate focus on these vastly different roles of the regulators. Media reports on NITI Aayog’s proposal suggest that the focus is more on infrastructure regulators such as telecom, ports, electricity, where even the basic functions and mandate of each regulator is vastly different. 
 
If consumer protection is the focus, the process of setting things right needs to extend beyond independent regulators. Dr Jayashree Gupta, who heads Consumers India, has pointed out that “Consumer Forums, which were set up to provide speedy justice to consumers” are suffering from the same delays that affect our judicial system. She says, “3.53 lakh plus cases are pending in consumer forums across country.” Of these, less than 10% are decided in the 90 days mandated by the Consumer Protection Act.
 
Consumers India has appealed to the prime minister to review the functioning of all regulatory agencies such as the Medical Council of India, National Pharmaceutical Pricing Authority, Food Safety Standards Authority of India, Telecom Regulatory Authority of India, Insurance Regulatory Authority, Securities & Exchange Board of India, etc, and subject them to a rigorous ‘consumer satisfaction test’ to determine whether they have been able to rise to the expectations of consumers. It has also suggested that all institutions having direct or indirect interface with consumers should be subjected to a rigorous consumer audit with a view to build a system of continuous improvement vis-a-vis consumers. It is a no-brainer that all these regulators, including the Reserve Bank of India, which is in charge of regulating banks and financial services, will, probably, fail the test. NITI Aayog, while working on its draft law, has apparently held discussions with 30 stakeholders including industry associations and regulators. It had called for suggestions until July this year and a draft law is due to be released shortly. We wish that NITI Aayog had at least made an attempt to involve the actual users in the discussion through a formal engagement process something that all regulators are certainly loath to do.

User

COMMENTS

MOHAN SIROYA

10 months ago

Sorry wrote a lengthy piece but it did not go. Now I am giving up.

MOHAN SIROYA

10 months ago

Sorry wrote a lengthy piece but it did not go. Now I am giving up.

Ramesh B Mhadlekar

10 months ago

RBI should be scrutinized by CAG

Gopalakrishnan T V

10 months ago

Very good proposal. Regulations have failed everywhere is a reality. The Government has to ensure that regulatory standards improve in all Institutions and they are made accountable . Even in the the private sector, the services have deteriorated because of the lack of Governance standards and accountability. The only way to improve the regulation is to make aware of the Consumers rights among the people and make the people demand fulfilment of their rights. This is possible only if there are regulators to regulate the regulatory bodies and these regulators are represented by consumer bodies. The approach of appointing retired bureaucrats and politicians in regulatory bodies should come to an end. They can best be appointed as advisers having no executive powers.

REPLY

MG Warrier

In Reply to Gopalakrishnan T V 10 months ago

A very balanced view. I differ with the view, even if it is coming from an expert body like NITI Aayog, that a super-regulator can help us out of the present chaos. First, we have to restore faith in the rule of law. Second, government, yes GOI, should enable existing regulators and auditors, including RBI and CAG to carry out their responsibilities by allowing these institutions to infuse professionalism in their functioning. Statutory bodies and PSUs cannot be made the parking places of retiring/retired bureaucrats or for accomodating temporarily NRIs who want to spend some time in India.

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