Theme Note for IJPA (Indian Journal of Public Administration) Special Issue 2018
Independent Regulatory Authorities in Indian and/or Comparative Perspectives
What are the cause-effect puzzles in independent regularity authorities (IRAs)? In other words, why IRAs? First, the causal nexus. The purpose could be the desire to liberalise, constitutionalise, and federalise the system of majoritarian democracy as was the case in the US Constitution (1787) and The Federalist (1787) authored by Alexander Hamilton, James Madison, and John Jay, among the makers of the American Constitution. Moreover, the move towards IRAs may also be pushed by governmental conflict of interest, overload, and dysfunctionality as it happened in the wake of the crisis of welfare states and social democratic regimes as well as those with considerable social policy expenditures in various parts of the world during the late 1970s, 1980s, and early 1990s. It all gathered momentum with the disintegration of the Soviet Union and collapse of communism, the end of the Cold War, and capitalist globalisation that followed. The IRAs became attractive in the context of the transition from government to governance and in the quest for mutual autonomies of the government, the civil society, and the market, their accountable and transparent functioning in network governance, and their non-partisan administration.
We begin with the following two propositions regarding the IRAs: (i) although they are common to both the presidential and presidential-federal governments and parliamentary and parliamentary-federal governments, they are more in tune with the former; and (ii) their incidence has tended to multiply in all types of political systems since the onset of privatisation and globalisation during the 1980s and 1990s.
Patterned after the British parliamentary and Commonwealth parliamentary-federal models in Canada and Australia, India was not particularly enamoured of the IRAs. India thus largely relied on parliamentary control of the executive through parliamentary debates, questions, committees, and confidence vote in the government of the day to ensure accountability, transparency, and efficiency of governmental performance.
Yet some mechanisms of regulatory exercise were put in place in the Constitution and the laws of the land. The examples are the Election Commission of India under Article 324 of the Constitution for legislative elections at Union and State levels and the presidential and vice-presidential elections, Union and State Public Service Commissions for civil service recruitments under Articles 323 to 315, the Auditor and Comptroller General of India for accounts of both orders of governments under Articles 148 to 151, the Reserve Bank of India (RBI) under RBI Act, 1934, with subsequent amendments. Beyond these instrumentalities, there is of course the final recourse to the judiciary and the popular electoral mandate and its quinquennial or mid-term renewal.
The Second Administrative Reforms Commission (ARC-II) Report (2008) gives a list of six major professional self-regulatig authorities operating in India, each formed under respective Acts of Parliament (year within brackets): Bar Council of India (1961), Medical Council of India (1956) presently being reformed as Medical Commission of India, Institute of Chartered Accountants of India (1949), Institute of Cost and Works Accountants of India (1959), Institute of Company Secretaries of India (1980), and Council of Architecture (1972) (Government of India 2008:113). The ARC-II has recommended to make their council as well as committee more inclusive by supplementing the professional members by lay members from the civil society at large to be nominated by the government in consultation with the concerned regulatory agency.
Another wave of IRAs came with a rush in the early 1990s. In 1991, there came the paradigm shift in the economic policy regime towards neoliberalism (bureaucratic deregulation, privatisation, and business liberalism nationally and globally) under the P.V. Narasimha Rao Congress minority government. The effects of these economic reforms are evident in areas such as industrial licensing, financial sector reforms in banking, stock market, telecommunication, electricity, companies affairs, security and exchange, insurance, coal, petroleum, etc. In all these sectors new IRAs have mushroomed under parliamentary statutes with varying degrees of autonomy. Various sectors of national economy, which were earlier managed under direct ministerial and bureaucratic control have now been placed under IRAs, reporting to the Parliament annually (Singh 2003:215-222). Among the new financial regulatory bodies in India, besides the RBI whose origins go back to British India, there are Securities and Exchange Board of India (SEBI), Pension Fund Regulatory and Development Authority ( PFRDA), Forward Markets Commission (FMC), Insurance Regulatory and Development Authority (IRDA), Foreign Investment Promotion Board (FIPB), Financial Stability and Development Council (FSDC), Project Exports Promotion Council of India, Foreign Direct Investment Promotion Board (FDIPB), etc. In various sectors of national economy such regulatory authorities include Central Electricity Regulatory Commission (CERC), Telecom Regulatory Authority of India (TRAI), etc.
An examination of various Acts under which the IRAs are set up would show that the most autonomous among them is the CERC. The Electricity Regulatory Commissions Act, 1998, set up the CERC as a corporate body consisting of a chairperson and three other members appointed by the Union government on the recommendation of an independent selection committee. The incumbents of CERC are required to be persons with knowledge and experience and capability in the field of engineering, law, economics, commerce, finance or management. The chairperson is to be appointed from amongst persons who are or have been judges of the Supreme Court or Chief Justices of a High Court. All appointments to the commission must be made after consultation with the Chief Justice of India. The Act takes care to ensure the independence and autonomy of the chairman and members of the commission by guarantying them security of service and emoluments. The Act also enables the state governments to set up State Electricity Regulatory Commissions to ensure their integrity and autonomy to depoliticise the pricing and distribution of power. Moreover, in domain of monetary policy the Reserve Bank of India has also enjoyed exceptional autonomy, though a recent amendment to the RBI Act has made the position of the Governor from being the arbiter to the first among the equals in the expanded Monetary Policy Committee chaired by him and consisting of the RBI Governor, Deputy Governor, and Executive Director plus three Independent Directors appointed by the Union government based on nominations by a committee comprising the Cabinet secretary, RBI Governor, Economic Affairs Secretary, and three experts from the field of economics/banking/monetary policy. Other IRAs consist of experts in the concerned technical field or administration but lack the mandatory judicialisation via a chair with high judicial background.
The United States presidential-federal system, featuring (i) separation of powers among the Congress, Presidency, and the Supreme Court, (ii) federal division of powers between the national and state governments, (iii) a powerful federal second chamber in the Senate; and (iv) the consequential multiplied effects of institutional checks and balances, is the locus Classicus of the IRAs in comparative government and politics. Four distinct phases of the evolution of IRAs in the USA are often delineated. First, there is the late 19th/early 20th century creation of the first independent regulatory commission, the Inter-State Commerce Commission. Second, the New Deal era witnessed increasing number of federal agencies, many of them regulatory in nature and geared towards economic recovery from the Great Economic Depression; several have continued to examine the role of competition in various industries. Third, there was the rise of social regulatory policy in the 1960s and 1970s relating to health, safety or equal opportunity. Fourth, there came the era of de-regulation and various attempts at regulatory reforms that began during the Ronald Regan presidency during the 1980s and after (Furlong 2008: 1694-1697).
In the United Kingdom, as elsewhere, the trend of public service reforms during the late 1970s , 1980s, and 1990s known collectively as ‘new’ public management, has also brought about the phenomenon of what the political scientists have called the ‘regulatory state’, meaning a state with an operating philosophy of acting ‘at a distance’ on policy domains. Obsessed with the doctrine of parliamentary sovereignty, the state in the UK seeks to act via instruments such as accounting and audit. Mischael Power (1997) calls the British version of this phenomenon ‘the audit society’ mentality.
Furlong, Scott, ‘Regulatory Policy: Role and Importance’, Encyclopedia of Public Administration and Public Policy, ed. Evan M. Berman, New York: Tayor & Francis, 2008: 1694-1697.
Government of India. Second Administrative Commission, Ninth Report: Social Capital: A Shared Destiny, Chapter 5; ‘Self-Regulatory Authorities, pp. 113-130. New Delhi, August 2008. (Chair M. Veerappa Moily).
Hamilton, Alexander, James Madison, and John Jay. The Federalist, New York: Basil Blackwell, 1987, 2nd edition. First published 1787.
Power, Michael. The Audit Society: Rituals of Verifications, U.K.: Oxford University Press, 1997.
Singh, M.P. ‘Economic Liberalization and Federalization in India: Mutually Reinforcing. Responses to Global Integration,’ in Lazar, Harvey, Hamish Telford, and Ronald Watts, eds. The Impact of Global and Regional Integration on Federal Systems: A Comparative Analysis, Montreal and Kingston: McGill-Queen’s University Press, 2003: 191-238.
CALL FOR PAPERS: On selected aspects of IRAs due by 31 March 2018 in 3000 to 5000 words with an Abstract in 150 to 200 words and four to five Keywords. Email to Editor, firstname.lastname@example.org
Mahendra Prasad Singh
Editor, IJPA (IIPA/SAGE)