Editorial: The FAA challenge

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Updated: April 11, 2015 1:05:10 AM

Regulators need to be professionals

While airlines can now breathe easy since the US Federal Aviation Authority (FAA) has restored India’s safety rating after 14 months, there are larger lessons to be drawn. The FAA downgrade never took place because Indian airlines were failing safety standards, it took place because the airline regulator didn’t have enough trained officials and full-time flight operations inspectors (FOIs). And that, in turn, was dictated by the fact that a bureaucratic organisation found it impossible to pay the kind of salaries that such jobs commanded. Fortunately, the problem has been taken care of with the government deciding to approve 75 posts of FOIs. The larger issue, and the FAA had also raised some concerns about this, is of why top regulatory bodies must be manned by bureaucrats and not professionals.

Nor is the problem restricted to the Directorate General of Civil Aviation. India needs to induct top-notch professionals in all parts of government, but nowhere is this need more urgent than in technical bodies such as regulators. The Directorate General of Hydrocarbons, for instance, should be someone with expertise in petroleum and it would be more helpful in the markets regulator had experience of capital markets. Similarly, it has to be worrying that most electricity regulators in the state as well as the centre are retired civil servants, mostly from the power ministry—the sorry state of power regulation in the country is mostly a reflection of the gene pool that is being tapped. While it is probably difficult to induct top-notch professionals in routine government jobs, as far as regulatory bodies are concerned this is likely to be less of a problem since there is a ready-made solution—put a small cess on the industry, like say telecom, and use this to fund the creation of a top-notch regulatory body.  In the case of the telecom industry, for instance, where companies are shelling out upwards of R1 lakh crore for spectrum, it is critical to have top-notch professionals that are up to speed on regulatory developments in the sector. A related issue is of the size of such bodies—since Sebi has, for instance, just 600 officials as compared to SEC’s 4,000, it is hardly surprising its record in securing convictions is very poor. A modern India cannot be run without a modern regulatory system.

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