January 14, 2005, New Delhi, Press Release

“An independent and accountable regulatory framework is a specific response to the general mantra of promoting economic growth” observed Montek Singh Ahluwalia here today. He was speaking at a national seminar on “Regulatory Framework for Infrastructure Sector in India”, jointly organized by the Planning Commission and CUTS International. He also emphasized that we need regulators not only in the sectors with private players but also for government monopolies like railways to ensure transparency and fairness.

The seminar saw a large turnout from across the country representing different groups of stakeholders that included planning commission members, regulators, policy makers, civil society organizations, academia and media. An interesting aspect of the seminar was a presentation by noted US based expert on regulatory issues, Scott Jacobs, who shared his experiences from across several developing countries.

Speaking on the occasion, Pradeep S Mehta, Secretary General, CUTS International, highlighted the dire need for capacity building on various aspects of independent regulation, not just for members/staff of regulatory bodies but also for other stakeholders including consumer groups, media, and the policy makers. He noted that any suggestive measures should keep in mind the local context while addressing any regulatory issue and also recommended a multi-stakeholder approach for an effective regulatory regime.

Shrawan Nigam of the Planning Commission opined that it was worth considering that in most regulatory legislations the term ‘policy directives’ had been left undefined for convenient interpretation in an entirely discretionary manner. Further, he also observed that the policy directives should be clearly laid out. He also emphasized that considering the huge lack of regulatory resources, regulators should be put in place in those sectors according to the specific needs of that sector rather than merely indulging in general over-regulation.

While several experts expressed the need for looking at international good practices, Sanjeev Ahluwalia, Joint Secretary, Ministry of Finance urged that caution be used in this regard. According to him the functioning of the regulators needed to be benchmarked to Indian standards and situations. Benchmarking against alien standards would not necessarily be appropriate and could even disrepute the regulators unnecessarily and thereby hurt the cause of regulation.

S Sundar of The Energy & Resources Institute (TERI) lamented that much of the areas in the transportation sector remains largely unregulated. Even where some regulations are there, they are neither adequately framed nor properly implemented. He urged for a comprehensive regulatory framework for the sector.

Ashok Desai, noted economist, suggested that considering the current scenario in the telecom sector, the regulator should go for minimum regulation and deal primarily with interconnection issues that were the crux of promoting and maintaining competition.

Gajendra Haldea of NCAER, who has been instrumental in drafting the Electricity Act 2003 emphasised that competition should be promoted both in generation and distribution of electricity as much as possible while ensuring an open access.

There was a general consensus among the participants that there was a need for a workable framework to enforce regulatory accountability in an institutionalized manner. In addition to submitting an Annual Report to the Legislature, Civil Society Organisations could be mandated and resourced to hold the regulators accountable. It was also emphasized that proper coordination mechanisms amongst various regulatory bodies had to be institutionalized.