The 2G scam, the CAG report and others will tell you, was because the minister A Raja did not follow the Telecom Regulatory Authority of India (Trai) recommendations. But while it is true Raja didn’t follow Trai recommendations in their entirety, it cannot be denied he stuck to the main one ? to not auction 2G spectrum.
In the power sector in the capital, the regulator is at war with the chief minister and the case is before the courts. In the petroleum sector, the regulator PNGRB was at loggerheads with the line ministry for so long, the ministry did not even notify all its powers ? The list of regulatory failure is huge, and it is to fix this that the Planning Commission has come up with a Bill on regulatory reform on which Planning Commission deputy chairman Montek Singh Ahluwalia said a decision would be taken shortly. The decision on regulatory reform would take place alongside a move to bring in more transparency in procurement and PPP contracts.
?The regulatory structure (in India) has been ad hoc. Every ministry that deals with an area, having accepted that public-private partnerships do need some regulatory framework, has evolved a regulatory framework relevant for that ministry. What we now have is a number of regulators; there are regulators in some sectors, none in others,? Ahluwalia said in his opening remarks at the National Regulatory Conclave organised by CII in partnership with the Planning Commission on Tuesday.
There is no overall philosophy of the government on economic regulation remarked Gajendra Haldea, advisor to the deputy chairman of the Planning Commission, in reference to the issues put forth by Ahluwalia, who asked three pertinent questions. ?Is the underlying regulatory philosophy common? Should it be made common? And if it is to be made common is there something about the architecture that should also change??
Unlike the UK, where the regulator reports to the ministry, and the US, where the regulator is independent of government and is accountable to Congress, India ad hoc structure of regulation has thus far not made regulators accountable to the executive, the judiciary or the legislature. On the selection criteria for regulators, Haldea remarked that it left a lot to be desired and that regulatory bodies are viewed as ?fiefdoms for retired bureaucrats,? raising the need for transparency in selection procedures. Also, the power of regulators varies across sectors?one underlying issue is that ?there is a regulator that deals with a ministry but there is no cross-ministerial regulator,? citing the example of the energy industry, Ahluwalia recommended that there be a single regulator for all ministries that cover energy, at the same time noting that this would probably be unacceptable to most.
Haldea raised an important point on licences, recommending that licences be issued by those who are meant to enforce them. In other words, ?the regulator should be given the power to grant licences since he has been thrust with the responsibility of enforcing its terms.?
The Regulatory Reform Bill already has a lot to achieve, even before it has been introduced. As per its preface, the Draft Bill applies to electricity, oil, gas an coal, telecommunications and Internet, broadcasting and cable TV, post, airports, ports and inland waterways, railways, Mass Rapid Transportation Systems, water supply and sanitation, in an era in which the exclusive presence of the public sector is giving way to increasing private investment in infrastructure, thereby making independent regulation critical.