Core Demand of the Question
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Regulatory bodies are independent institutions established to oversee specific sectors, ensuring fair competition, consumer protection, and systemic stability. In India, agencies like SEBI, RBI, and TRAI play a crucial role in governance. However, concerns over political interference and lack of financial independence threaten their autonomy, impacting policy effectiveness and investor confidence.
Positive Impact | Negative Impact |
Administrative Expertise: Bureaucrats bring governance experience, aiding regulatory efficiency and compliance with legal frameworks.
For example: Former IAS officers in IRDAI streamlined insurance regulations. |
Government Influence: Civil servants may prioritize government policies over industry needs.
For example: RBI faced criticism for aligning with fiscal policies at the cost of monetary independence. |
Policy Continuity: Their experience ensures seamless policy transitions and stable regulatory frameworks.
For example: Former bureaucrats in SEBI maintained capital market reforms. |
Conflict of Interest: Close government ties may hinder unbiased decision-making.
For example: Civil servant-led regulatory bodies have often hesitated in taking strict action against public sector entities. |
Interdepartmental Coordination: Bureaucrats’ network helps in better coordination between government agencies and regulators.
For example: FSSAI benefited from civil servants’ connections for food safety enforcement. |
Lack of Sectoral Expertise: Bureaucrats may lack deep industry knowledge, affecting regulation quality.
For example: Power sector regulators faced criticism for inadequate technical reforms. |
Strong Decision-Making Ability: Bureaucrats’ crisis management skills help in handling regulatory challenges effectively.
For example: Former civil servants led the resolution of NBFC liquidity crises. |
Weakening Institutional Autonomy: Overreliance on retired civil servants blurs lines between regulation and policy-making. For example: CCI decisions have sometimes been influenced by government economic policies. |
Ensuring true autonomy in regulatory bodies requires merit-based appointments, fixed tenures, and reduced executive interference. Over Reliance on retired civil servants must be balanced with domain experts for greater effectiveness. Strengthening parliamentary oversight, transparent selection processes, and performance audits will foster credibility, accountability, and public trust in regulatory institutions.
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