Reserve Bank of India governor Raghuram Rajan on Friday said the country should strengthen its regulatory and government capabilities, but also restrain from too many checks and balances that could slow the functioning of policymakers and create an Appellate Raj.
“Let me emphasise, we need checks and balances, but we should ensure a balance of checks. We cannot have escaped from the licence permit raj only to end up in the appellate raj,” Rajan said in a speech at an event in Goa on Friday.
Stating that India’s experience has been different from other countries, Rajan said here strong judiciary, free press, NGOs and opposition parties are present, which check government excesses, but also tend to slow the working of the government and regulators.
“We will have to strengthen government (and regulatory) capability, resisting the temptation to implant layers and layers of checks and balances even before capacity has taken root,” Rajan said.
This is perhaps the third time the RBI governor has warned against excess checks and balances that eventually end up slowing the mechanism of government.
In an earlier speech last year, Rajan had pointed out possible excess oversight if the recommendations of the financial sector legislative commission were to be adopted. Rajan had warned that such excessive oversight would significantly reduce RBI’s powers.
The FSLRC had recommended the setting up of an appelate tribunal to hear appeals against RBI and other finsancial sector regulators.
“If the government or regulator is less effective in preparing its case than private parties, we ensure that the appellate process largely biases justice towards those who have the resources to use it, rather than rectifying a miscarriage of justice,” said Rajan on Friday.