Examine the systematic issues that create hurdles in the effective functioning of regulatory bodies in India.
The regulatory bodies are crucial effective, independent and effective functioning of sectoral authorities in India, such as:
- TRAI – regulating telecom sector
- RBI – banking sector
- IRDA – insurance sector
- SEBI – capital market
Systematic Issues:
- Politicization –
- Tussle between RBI and government over credit to NBFC sector.
- Concern with SEBI over information asymmetry.
- Political interference in appointment process.
- Parallel bodies creation, undermining role of regulators –
- Financial sector is India has complex maze of regulations like RBI, SEBI, PFRDA, IRDA.
- Proposal of government to set up payment regulation bank is opposed by RBI.
- Corruption and Collusion
- Unpredictable regulatory regime and frequent amendment of laws.
These have led to ineffective functioning of regulatory bodies. Independent functioning, free from executive interference is crucial to fulfill their envisaged objectives.
Measures:
- Independent mechanism for appointment of officials (non-political process).
- Non-government interference in functioning.
- Stable regulatory regime with effective stakeholder consultation.
- Consolidation of laws & bodies into minimum required framework.
- Skilled workforce with value sensitization training to curb malpractice.
These measures could go a long way in promoting institutional autonomy and effective functioning of regulators in India.
Topics: GS-II: Constitutional Statutory Regulatory and Quasi Judicial Bodies