Government role in regulating the regulators- Interference or Improvement

To regulate different sectors, we have different regulators like RBI (Reserve Bank of India) for banking. Though it is crucial to have some regulators having a bird eye view over the social, economic and political domains, what is more important that they are not manned by wrong men (women) under weak laws. These institutions are able to serve their charter in letter and spirit only if they remain independent and autonomous. Beginning from appointment to removal, the regulators are invariably dependent upon the government of the day. This calls for a look on the government’s role in regulating these super-regulators.  

Without delving deeper into into following questions, this blog tries to unravel few regulators across dimensions- economic, social, political.  

a. Why do we need regulators? 

Safeguard interests of markets, customers (citizens) and nation

b. Who appoints them, how (process) and degree of independence in their functioning and day to day affairs? 

It is crucial that the regulators are appointed by the government in the spirit of its meaningful establishment. The laws (charters) governing them need to be updated accordingly so that institutional inertia doesn’t cause emergence of issues in fast changing times. CBI (Central bureau of Investigation) may become a political tool easily due to absence of a well dedicated law governing it's functioning. Presently it is regulated under DSPE (Delhi Special Police Establishment) Act, which prevents CBI to be autonomous, independent and a premier investigation agency as needed for probing and solving complex cases like Arushi murder, corruption cases, Godmen acts etc. 

Sectors of regulatory ecosystem

A. Economic- RBI- The banking regulator was questioned on the way demonetization was done in November’16. RBI Governor was found to be answering difficult questions surrounding demonetization in Public Accounts Committee. Recent RBI report indicates its failure on some crucial parameters like targeting black money and corruption (more than 99% demonetized money back in the system), less cash economy etc. Undoubtedly, a positive development from the historic exercise is growth of digital payments. Digital platforms like Paytm, PhonePe etc. have become acceptable mechanisms in sending, receiving, and paying entities or individuals in this context. 

In the recent days, govt. has been pushing for a payments Regulator Board outside the purview of RBI despite its successful work in this domain and international examples where central bank regulates this mechanism. This also goes against Ratan Watal committee recommendations set up by government in this regard. Ideal way out could have been the tried and tested 3+3 composition (3 personnel each fielded by government and RBI) of a regulatory body within the premises of RBI similar to MPC. Also as RBI Deputy Governor Mr. Acharya pointed out that too much government interference in RBI can cause negative impacts on economy viz. unattractive investment destination, bad economics and good politics, market failure etc.

B. Social

a. Cinemas- CBFC (Central Board of Film Certification) and FTII (Film and Television Institute of India) - Does Cinematograph Act 1952 needs updation for meaningful and constructive significance of the institution in Internet driven modern era? Or should CBFC be dismantled because censorship doesn’t resonate well in 21^st century democracy? These questions were addressed by Shyam Benegal committee sometime back. Another set of question which arise whether the role of CBFC be limited only to a certifying agency or also as a censor body? On the one hand, many feel that CBFC, as an institution is obsolete in present times. But some, on the other, feel that Indian social order demands a regulatory agency fulfilling the work of certifying body (U/A, A category of movies etc.)

Another organisation in this aspect is FTII. It was in controversy a couple of years ago due to the persons appointed like Gajendra Chauhan as its chairman. Questions were raised as in whether the appointment served the government by fielding its so-called “their men” or institutional requirement. As compared to persons like Shyam Benegal and Girish Karnad who headed it, personal integrity of recent chairmen like Mr. Chauhan and Kher has been questioned off late. This casts a shadow on organisational and institutional integrity and its efficient functioning. Saffronising the institute is what students feel has been done by government while appointing the heads of institute.  

b. Education- No country can dream to be a superpower unless its citizens are skilled, educated and employed. India needs such citizens more than any other country in the world now as it is at the cusp of a demographic dividend. It may reap its benefits (dividend) or miss the one-time opportunity (disaster). This will be decided based on several factors including government’s policies in education especially higher education like medical and engineering colleges, centrally and state funded universities etc. 

Revamping MCI (Medical Council of India) by establishing NMC (National Medical Commission) is the need of the hour. It has been highlighted by several committees because of the failure of MCI in regulating medical education of the nation. Issues in medical education wherein MCI couldn’t deliver as promised in MCI Act include exorbitant capitation fees, increased focus on management quota seats for the affluent at the cost of poor but talented students. Moreover, MCI failure in permitting establishment and expansion of medical colleges caused a non-commensurate increase in seats vis-à-vis aspirants and population. This led to creation of limited (below par in quality and quantity) health cadre (As compared to WHO norms of 1 doctor per 1000 population, Bihar has one doctor for every 28000 population) especially for rural areas etc. NMC is a much needed move by government to overhaul this much needed sector. Bridge courses to mainstream AYUSH with allopathy can be crucial in reforming the above pathetic ground reality through barefoot health practitioners.

Similarly, UGC (University Grants Commission) has been replaced by HECI (Higher Education Commission of India) as a key reform in higher education. It proposes separation of its academic and financial powers. The former will be undertaken by the new body named HECI and the latter has been entrusted to the MHRD (Human Resources Development Ministry), which has been criticized by several academicians and policy experts. Though several positive measures have been included in the HECI bill to replace UGC, concerns related to its composition (less teachers), removal on moral turpitude, micromanagement in the garb of autonomy, corporatization of education sector, restricting role of states in educational matters can’t be set aside.

Thus, in education sector, it is important to ensure that regulators like UGC and MCI are restructured in a manner that will ensure strengthening of their autonomy without any scope for patronage politics and political interference.

C. Political- Actions of Home Ministry (MHA) against civil society organizations (NGOs) like Greenpeace and rights based groups like Amnesty International under FCRA (Foreign Contribution Regulation Act) need deep introspection. On the one hand, government has accused these groups for violating FCRA while accepting foreign donations. Eg Greenpeace licence was cancelled because it was accused of manipulating views of citizens against mining operations. On the other, these groups blame the government for misusing FCRA as a tool of repression and a weapon for silencing dissent. Some analysts have pointed at the non-conformity of FCRA with international laws and principles. For example India is a signatory to ICCPR (International Covenant on Civil and Political Rights) which promotes and guarantees the right to freedom of association, also mentioned in Indian Fundamental Rights. But these actions under the garb of FCRA seem to be violating both of the above. Because of this India’s apex human rights watchdog, NHRC (National Human Rights Commission) has also issued a notice to MHA.

FCRA is an intimidating law crafted during emergency of 1976 to prohibit MPs, parties etc. from accepting foreign contributions. Thus, the genesis of the draconian FCRA lies in anti-democratic principles and ideals. What worries citizens and experts is the exhibition of double standards by political parties (earlier UPA and now NDA) in usage of FCRA. They received foreign funds from Vedanta and supported each other in the form of a mutual cooperative set-up (none protesting benefits received by the other party and infact both were united in opposing a Delhi HC order against them in SC) despite FCRA doesn’t permit such foreign donations. Though none can debate the need for eliminating foreign interference (sovereignty) in the nation’s social and economic policies, FCRA should not be used in ambiguous (FCRA actions against these groups in the garb of public interest), arbitrary and discretionary manner. 

A question thus arises whether FCRA should be repealed? Of course not because regulation of NGO funding is a significant and crucial aspect especially in a country where more than 30 lakh NGOs exist. However, curbing the voices in the civil society by way of a colourable legislation is unacceptable and draconian. The way forward is NITI Aayog’s DARPAN portal which is registering the NGOs for their accountable and transparent functioning and funding.               

  

Hence, it is important that these regulatory bodies are provided autonomy and independence. If they are controlled and regulated by government in such a way that the “interference element” looms high, India may gain less and lose more in long run. There is a need for the government (executive) to exercise social, economic, political, and moral restraint while dealing with appointment of regulators. This is because parties come and go, their appointees too disappear with time but the ideals, principles and fundamentals of the institutions regulating crucial sectors need to be preserved and safeguarded at any cost. The standards and benchmarks set up by them need to be reviewed and up-scaled so that they reach higher echelons and henceforth India is successful in attaining the position it deserves in the global order.