Amid the knuckle-down debate on corruption, the aspect that gets glossed over is the lack of transparency in selections to government posts. This opens up the appointments for competing interests to take control of and leaves a vicious trail of corruption in its wake.
How vicious that can be is staring us in the face in the CVC selection muddle but the implications are far more serious than what this solitary case would suggest. We need to figure out how to bring in transparency to these appointments, as a significant portion of corruption springs from these critical appointments.
The related aspect is the confidence the government needs to show vis-?-vis the incumbents of these systemically important entities. By the middle of 2011, for instance, the government would have appointed the chiefs of at least three regulators (Sebi, RBI and Trai) and then leave itself with less than two and a half years to work with them. When the next government takes the road to Raisina Hill, it will have to begin anew, setting up ties with these regulators to do business. Instead, won?t it be better for these posts to be co-terminus with the political executive?
One of the first things to put in order is to set out some clear qualifications for those who will set into these offices.
As an example of outdated thoughts, just check out the qualifications mandated for the Chairman of the capital market regulator, laid out in the Sebi Act of 1992. It simply says the Chairman and the other members of the board ?shall be persons of ability, integrity and standing who have shown capacity in dealing with problems relating to securities market or have special knowledge or (have) experience of law, finance, economics, accountancy, administration or in any other discipline which, in the opinion of the Central Government, shall be useful to the Board?.
Frankly the requirements for those down the ladder are far more stringent. And the problem is not with Sebi but with every office that makes or breaks economic policy in this country. For those offices where there is no statutory backing, even such a perfunctory list of qualifications is not spelt out.
So, is it possibly our good luck that all incumbents in the Sebi chair have distinguished themselves? But, going ahead, what prevents the appointment of just about anyone who seems to the government to fulfil the criteria of being useful to the Board. It is not just a possibility but has been used at least once, for one of the sector regulators as well. The appointment of the current CVC, too, is evidence on this score.
The problem stems from the appointment procedure in the government. Appointments to any senior office, i.e., of joint secretary and above within the government, is finalised by the Appointments Committee of the Cabinet. This is chaired by the Prime Minister and includes the home minister and the concerned minister. But, in effect, it is the establishment officer in the home ministry who calls the shots in most cases. The reason why the government writes in such loose qualifications is because the IAS system abhors any specialisation. Making the list broad gives enough room for all to have a go at the attractive slots. The final selection depends on who earns the backing of an influential lobby. Some of these posts, it is true, are routed through the UPSC, but as per the division of responsibility within the government, it can only make recommendations. The drawing up of the short list to the appointment orders is handled by the department of personnel, which works under the PM.
As the experience from more and more sectors is demonstrating, the umbilical chord between the ministries and business interests is growing deeper. In this environment, to pretend that all candidates can and do qualify is foolhardy.
A related aspect of cleansing the system is to make the terms of the regulators co-terminus with the political executive. They have to implement the policy laid down by the ministers. But if the regulator, and I mean the chairman of the body, does not seem to enjoy the confidence of the political executive, he opens up a clear path for the players of the sector to cosy up to the minister and influence policy. In the current din, it is easy to forget the post of the chief of the Central Electricity Regulatory Commission was left vacant for more than a year, with the Planning Commission, the power and the finance ministries clearly aligned with one or the other interest groups.
From the beginning of 2010 we have seen the aspersions on neutrality cast on the de facto regulator for the oil and gas sector?the Director General of Hydrocarbons. The 2G scam did not spare the telecom regulator and now there is a full-scale controversy over air fares. Along the way we have had trouble over the setting of tariff by the power sector regulators like the one for Delhi. The list does not even include the uproars in the financial sector.
In this environment, those who would argue about the independence of the regulator should look at the current state of the inconvenient recommendations made by the different regulators. The other argument put forward is that of fostering competition, the level playing field and consumer interest. But here, too, if the regulators do not manage to convince the executive, none of these causes are satisfied. Making the terms closer does not mean choosing a candidate from the industry, but even an academic has a better chance to convince the powers, only when they are on talking terms.
To cavil at it only prolongs the current stasis, creating a fine opportunity for games like corruption to be played out.
?subhomoy.bhattacharjee@expressindia.com
