For achieving the desired objectives, it is necessary to ensure that the regulatory institutions remain…

Question

For achieving the desired objectives, it is necessary to ensure that the regulatory institutions remain independent and autonomous. Discuss in the light of the experiences in recent past.

Ghissu Editorial · Accepted Answer

Regulators meet objectives such as investor confidence and fair competition only when insulated from the governments that often own the firms they regulate. The 2014 TRAI Act ordinance, the 2G case and the 2018 RBI Section 7 episode show how fragile that autonomy has been.

**Introduction**

The 2014 ordinance amending the TRAI Act, passed so that a former chairman could join the Prime Minister's Office, shows why regulatory autonomy is contested. Regulators exist to take technical, long-term decisions that governments, often owners of regulated firms, cannot make credibly.

**Why Independence Serves Regulatory Objectives**

1. **Credible commitment**: Investors trust rules that do not shift with elections, and SEBI's stand in the Sahara case, upheld by the Supreme Court in 2012, strengthened that confidence.
2. **Neutral umpire**: Only an autonomous regulator can treat state-owned banks, LIC and BSNL on par with private rivals.
3. **Expertise over expedience**: The CCI's Rs 6,307 crore cement cartel penalty (2012) and TRAI's 2016 ban on discriminatory data tariffs show expert bodies resisting powerful interests.

**Experiences of Eroded Autonomy in the Recent Past**

SKETCH: forcefield | Regulatory Autonomy in India
center: Independent regulator
driving: Statutory backing, Fixed tenure, Expert members
restraining: Executive appointments, Post-retirement jobs, Budget dependence

1. **Appointments and exits**: Regulators are chosen by the ministries they oversee, and post-retirement government jobs remain open, as the 2014 TRAI amendment showed.
2. **Policy bypass**: In the 2G case (2012) the Supreme Court cancelled 122 licences after TRAI's spectrum advice was selectively applied.
3. **Tariff suppression**: State electricity regulators withheld tariff revisions under political pressure, deepening discom losses that UDAY (2015) had to rescue.
4. **Central bank friction**: The first-ever Section 7 consultations under the RBI Act in 2018 preceded Governor Urjit Patel's resignation.

**Conclusion**

Regulators deliver their objectives only when insulated in appointment, tenure and finances. A regulatory governance law on the FSLRC's lines, with cooling-off periods and parliamentary oversight, would make independence an institution rather than a convention.

For achieving the desired objectives, it is necessary to ensure that the regulatory institutions remain independent and autonomous. Discuss in the light of the experiences in recent past.

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