India has several “regulators”, trying to “regulate” several sectors of the economy. There is SEBI keeping a check on the stock markets, TRAI doing the same for the telecom and broadcasting sectors, IRDA for the insurance sector, PFRDA for pensions, DGCA for civil aviation and CERC for electricity.
By their very nomenclature regulators regulate, which many mock to mean strangulate industries. In many cases, regulators focus on keeping private players in check, thinking of them as rapacious booty hunters who need to be tamed, confirming the suspicion that the government never really accepted the private sector as a dynamo of growth. What India needs in the form of regulators are bodies that focus on promoting and developing industry. For if industries develop, there are more tax revenues for the government, more jobs for the people, and more social and economic goals.
This would in turn propel industrial growth and start a virtuous cycle of prosperity. Regulation cannot become shorthand for controlling power tariffs. Equally, the proposed coal regulator should overhaul the defunct and destructive policy of reserving coal production for the inefficient public sector and not become an excuse to “regulate” prices, production capacities, import quotas and the like.
The primary role of regulators must be to ensure that the country’s resources are exploited efficiently and transparently for the benefit of industry and thereby people. Transparency demands that resources are allocated using ascending or single-step auctions, or tenders, not via opaque “administered methods” or “First Come First Served” which lead to corruption and hence must be banned.
Pricing must be remunerative, for only a profitable company can continue investing and exploring. Keeping prices and margins low, and crippling industry doesn’t serve anyone’s purpose, least of all the government’s. Domestic production of gas will increase, lowering the need for imports and easing the balance of payments position.
Regulators must of course always protect consumers. For if consumers suffer, industry suffers. Indeed, the whole reason for setting up SEBI came from the securities fraud of the early 1990s.
A fine balance between protecting consumer and corporate interests is required. The regulator often has to shield industry from the government’s faulty policies, just like the Supreme Court has to shield people from laws that violate the Constitution. A development oriented regulator must have the authority to question government policy, forcing it to make amends as and when required.
(Source: Extracts from an Article by Shri Anil Shinde in the Times of India dated 11.09.2013).
