PMO to draft new law to monitor economic regulators

In order to avoid overlapping of various regulatory authorities and to increase the accountability among the regulators, the Prime Minister's Office (PMO) has started working on a new law which will monitor and regulate the economic regulators in India. This move of the PMO is expected to provide some clarity when there are dark clouds looming over the integrity as well as independence of several regulators across sectors like petroleum, securities markets and airports.

The ministry of finance is facing allegations of interfering in the work of Securities Exchange Board of India (SEBI). The Ex-oil and gas regulator, Director General of Hydrocarbons V K Sibal, has been charged by Central Bureau of Investigation (CBI) for obliging oil and gas explorers in lieu of private favors. The civil aviation ministry has also being complained to Prime Minister that the airports regulator has become a barrier to new airports, when all the Airports Economic Regulatory Authority (AERA) has asked to do is safeguard passenger interests and prevent un-quantified revenue losses to government.

As per Dhirendra Swarup, Former chairman of the Pension Fund Regulatory and Development Authority, the regulators need to be accountable to the people. Presently there is no provision in the Reserve Bank of India Act to make the central bank accountable for its actions. Giving example of US, Swarup said that in the US, the chiefs of the Federal Reserve and Securities Exchange Commission appear before Congressional committees every six months for a performance review. The Comptroller and Auditor General of India, the government’s auditing body, can scrutinize regulators’ expenses and income however it is not allowed to do a performance audit on the regulators. 'The trick lies in striking a fine balance between accountability and non-interference’ Swarup said.

By adding further he said, if regulators are simply made accountable to administrative ministries or the executive, we are back to square one as the government will end up judging regulators, who were created in the first place to distance the government from discretionary decisions.' The regulators are considered as those bodies which are created by an act of the Parliament.

However, several ministries are also playing regulatory roles as they frame rules and laws. In most of the developing countries, Prime Minister’s or President’s Office have powerful body which screens the creation and deletion of such laws and rules. 

The Prime Minister’s Independence Day speech had lamented that there no law in country which enable the government to monitor the work of Independent Regulatory Authorities and make them more accountable without compromising their independence. The Prime Minister had said 'these regulatory authorities discharge many responsibilities which were earlier in the domain of the government itself... We are considering enactment of such a law.'