Regulatory Bodies in India | Indian Polity for UPSC CSE PDF Download

Introduction

Regulatory bodies are a set of organizations set up by the government to monitor, guide, and control various sectors such as banking, insurance, education or healthcare. In India, each industry has its own regulating body. They may or may not be under direct executive supervision. The FSSAI is in charge of food safety, just as the RBI is in charge of market inflation. Some other examples of regulatory bodies include Securities and Exchange Board of India (SEBI), Competition Commission of India (CCI), Small Industries Development Bank of India (SIDBI), etc.

Regulatory Body

• Role of government as a provider and distributor of goods and services or controller of law and order has been supplanted by many other regulating roles. Changing economic and social complexity demands an increasingly better form of governance, which can be not regulated by traditional form of government alone. Hence, many new regulatory bodies are required to compliment the regulatory functions of conventional government.
• In India, constitution empowers state or central legislature to frame laws, in order to devolve regulating power to autonomous institutions. Article 19 of constitution empowers legislature to frame laws, with the inkling of “reasonable restrictions”. These provisions provide the broad set of power to legislating bodies to establish organic regulating bodies. The Constitution as well as the laws enacted by Parliament has established the institutions and mechanisms to enforce the laws and rules. Article 53(1) of the Constitution regulates the exercise of the executive powers of the Union. Further, Article 53(3) authorizes the Parliament to confer by law such functions to ‘authorities’.
• The regulator acts like a mini-state in that it exercises legislative powers in the form of drafting regulations that are binding on regulated entities; it acts as the executive in its supervision and enforcement actions; and it performs a quasi-judicial function while assessing compliance with the law by regulated entities and compliance of processes by the regulator while imposing penalties on them.
• Regulatory agencies are remarkable in featuring a combination of regulation-making power that is delegated by Parliament, executive functions, and quasi-judicial functions. In addition, there are sound reasons for favouring significant political and operational independence in regulatory agencies. In order to obtain sound outcomes, clearly established un-conflicted objectives, processes governing legislative and executive functions, bringing in an element of separation of powers for performing quasi judicial functions and establishing an effective specialised mechanism for substantive judicial review of regulations and orders are required.

Functions of Regulatory Bodies

The regulatory body’s key functions are usually listed as follows:

1. Corrective actions
2. Regulations and guides
3. Review and assessment
4. Enforcement
5. Licensing
6. Inspection
7. Ensure free and fair market, especially after liberalization
8. Provides functional autonomy to private investment and shielding them from interference

Role of Regulatory Bodies

• India liberalised industries in the 1990s and handed over sectoral governance to regulatory bodies. These bodies played a constructive role in ensuring the free and fair market.
• Post 1990, Privatisation saw the advent of the ‘Indian Regulator’ that became the ‘nurturer’ and ‘parent’ of its sector. The regulators incentivised private investment by giving them functional autonomy and shielding them from interference.
• Also, regulatory bodies have shown that empowered regulator can bring fruitful results:
  • Steps taken by Reserve Bank of India (RBI) in tackling the liquidity crisis and management of increasing Non- Performing Assets (NPAs).
  • SEBI has also been instrumental in taking quick and effective steps in light of the global meltdown and the Satyam fiasco.
• However, improper regulation or failure of regulatory bodies in smoothening the interaction between markets and the State may lead to a new crisis. For example,
  • AGR issue: In October 2019, the Supreme Court demanded that telecom companies pay statutory dues worth ₹1.47 lakh crore to the central government.
  • These dues didn’t pile up overnight but stem from a 15-year-old dispute over sharing of revenues between telcos and the government. A well-regulated industry would not be subject to such a large fiscal shock.

Types of Regulation and Regulatory Bodies

Type of Regulation

• Economic regulation: Aims to prevent market failure through various markets distorting behaviour.
• Environmental regulation: In India environmental protection is a constitutional demand (FR’s, DPSP and FD’s). Aim is to protect environment from harm.
• Regulation in public interests: Wider section of protection, where target is more towards the quality of services and product.

Types of Regulatory Bodies

• Statutory Independent Regulatory Agencies: Unlike the conventional agencies controlled by government department or acting as government agencies, these are unattached to executive faction of government. Although there is not absolute autonomy, but still they enjoy a wide spectrum of autonomous power. Its need arose from the requirement of ensuring level playing field in laissez faire state of economy and also to ensure wider public interests. This form of institution was started in USA and there from spread to entire world.
• Self-Regulatory Authorities: These are created under different laws and are self-regulatory. Example -Press Council of India.

Issues with Regulatory Bodies

• Transparency: Stakeholders are barely apprised of existence of any such laws and if at all they know the law, it is written in so complicated manner, using law jargons that it hardly makes sense to layman people. Some laws inherently make provisions for promoting transparency but they are ill implemented, thus diluting its significance.
• Independence: Efficiency of the regulatory bodies can be ensured only if it is not controlled or interfered. This can be ensured only when it has financial resources and administrative freedom (fixed tenure, appointment or posting decisions). If it’s a delegated independence and not a mandated one, it becomes largely a nominal force and minimises the real power of intuitions.
• Accountability: In absence of proper accountability, institution may either turn out to be corrupt or unfair. Also, it reduces the chance of impartiality and efficiency. In order to maintain the accountability, political and legal mechanism has to be ensured. Parliamentary mechanisms form one of the most effective means to ensure accountability. Some of the common methods used to ensure accountability are:
  • Statute itself provides certain guidelines for ensuring accountability.
  • Audit by CAG.
  • Mandatory annual report.
  • Appellant bodies.
• Populist pressure: In India, political populism frequently takes precedence over economic concerns. This puts a pall over the rule of law. The ruling political parties constantly interfere with the functioning of regulatory entities, such as the government’s intervention in the RBI’s operations.
• Ineffective review system: Under the auspices of legislative committees, the review mechanism for the functioning of regulatory organizations is not very robust.
• Selection of non-experts: The appointment of non-experts to lead regulatory organizations may result in inefficiency in their operations. When the former Finance Secretary was named Chairman of the Reserve Bank of India, this issue arose.
• Overlapping of Powers – The presence of numerous regulatory organizations results in power overlapping. For example:
  • Environment- Central Pollution Control Board (CPCB) and National GreenTribunal (NGT).
  • Controversy between SEBI and IRDAI over Unit Linked Insurance Policy.
  • Education sector- All India Council for Technical Education (AICTE) and University Grants Commission (UGC).

Important Regulatory Bodies

• Reserve Bank of India
• Securities and Exchange Board of India
• Insurance Regulatory and Development Authority
• Competition Commission of India
• Telecom Regulatory Authority of India
• Petroleum and Natural Gas Regulatory Board
• Central Electricity Regulatory Commission
• Forward Markets Commission
• Atomic Energy Regulatory Board
• Central Silk Board
• Central Pollution Control Board
• Pharmacy Council of India
• Dental Council of India
• Veterinary Council of India
• Central Council of Indian Medicine
• Indian Nursing Council
• Central Council of Homoeopathy
• National Rain-fed Area Authority
• Inland Waterways Authority of India
• Central Ground Water Authority
• Directorate General of Civil Aviation
• Airports Economic Regulatory Authority of India
• Pension Fund Regulatory and Development Authority
• Food Safety and Standards Authority of India
• Bar Council of India
• University Grants Commission
• Financial Stability and Development Council
• All India Council for Technical Education
• Bureau of Energy Efficiency
• National Green Tribunal
• Advertising standards council of India
• Food Safety and Standards Authority of India

Reserve Bank of India

Since its inception, the Reserve Bank of India has undertaken the traditional central banking function of
managing the government’s banking transactions. The Reserve Bank of India Act, 1934 requires the Central Government to entrust the Reserve Bank with all its money, remittance, exchange and banking transactions in India and the management of its public debt. The Reserve Bank is fully owned and operated by the Government of India. The Preamble of the Reserve Bank of India describes the basic functions of the Reserve Bank as:

• Regulating the issue of Bank notes.
• Securing monetary stability in India.
• Modernising the monetary policy framework to meet economic challenges.

Main Functions

Monetary Authority:

• Formulates, implements and monitors the monetary policy.
• Objective: maintaining price stability while keeping in mind the objective of growth.

Regulator and supervisor of the financial system:

• Prescribes broad parameters of banking operations within which the country’s banking and financial system functions.
• Objective: maintain public confidence in the system, protect depositors’ interest and provide cost effective banking services to the public.

Manager of Foreign Exchange

• Manages the Foreign Exchange Management Act, 1999.
• Objective: to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.

Issuer of currency:

• Issues and exchanges or destroys currency and coins not fit for circulation.
• Objective: to give the public adequate quantity of supplies of currency notes and coins and in good quality.

Developmental role

• Performs a wide range of promotional functions to support national objectives.

Regulator and Supervisor of Payment and Settlement Systems:

• Introduces and upgrades safe and efficient modes of payment systems in the country to meet the requirements of the public at large.
• Objective: maintain public confidence in payment and settlement system

Related Functions:

• Banker to the Government: performs merchant banking function for the central and the state governments: also acts as their banker.
• Banker to banks: maintains banking accounts of all scheduled banks

Management of Public Debt:

• The Reserve Bank manages public debt on behalf of the Central and the State Governments. It involves issue of new rupee loans, payment of interest and repayment of these loans and other operational matters such as debt certificates and their registration.

Acts Administered by Reserve Bank of India

• Reserve Bank of India Act, 1934
• Public Debt Act, 1944/Government Securities Act, 2006
• Government Securities Regulations, 2007
• Banking Regulation Act, 1949
• Foreign Exchange Management Act, 1999
• Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Chapter II)
• Credit Information Companies(Regulation) Act, 2005
• Payment and Settlement Systems Act, 2007

Bimal Jalan Committee

• The Central Board of Reserve Bank of India decided to transfer a surplus of Rs. 1,23,414 Cr and Rs. 52,637 crore of excess provisions made over the years. This mark the first time the RBI will be paying out such a huge amount. The Government had budgeted for Rs. 90,000 crore from RBI. RBI transfers its surplus annually to the Government after making adequate provisions for contingencies or potential losses. For the past four years, it averaged Rs. 50,000 Cr.
• RBI was promoted as a private shareholders bank in 1935 with a paid-up capital of Rs. 5 Cr, the Government nationalized it in January 1949, making the sovereign the owner. Under Section 47 of the RBI Act, “after making provision for bad and doubtful debts, depreciation in assets, contributions to staff and superannuation funds, the balance of the profits shall be paid to the Central Government”. The money is transferred to the Consolidated Fund of India. The windfall gain can lead to a lower fiscal deficit. Otherwise, Government can spend this money on capital assets so that the capital expenditure can increase. Major recommendations of Bimal Jalan Committee in this regard are as follows:

Allowable

• Only realised equity built from profits must be distributed.
• The panel recommended that the Contingency Fund be maintained within a range of 5.5% to 6.5% of RBI’s balance sheet.
• Hence, the excess from the pre-decided 5.5% level or Rs. 52 ,637 Or has been written back, that is transferred to the Centre.

Not Allowable

• Revaluation gains from market fluctuations on foreign currency, gold or other assets must be retained. Revaluation balances were not distributable.
• Hence bulk of RBI’s legacy reserves are ring-fenced from transfer demands.

Salient features of Bimal Jalan Committee Report:

• It suggested that the framework may be periodically reviewed after every five years.
• If there is significant change in the RBI’s risks and operating environment, an intermediate review may be considered.
• It recommended to align the central bank’s accounting year with the financial year, which could reduce the need for paying interim dividend.
• The panel recommended clear distinction between the two components of economic capital, realised equity and revaluation balances. This is because of the volatile nature of the revaluation reserves.

The Committee also said, even if the RBI’s economic capital could appear to be relatively higher, it is largely on account of the revaluation balances, which cannot be distributable to the Centre.

• The Securities and Exchange Board of India (SEBI) was established on April 12, 1992 in accordance with the provisions of the Securities and Exchange Board of India Act, 1992.
• Its objective is to protect the interests of investors in securities and to promote the development of and to regulate the securities market.
• It shall consist of a Board consisting of a Chairman.
  • Two members from amongst the officials of the of the Central Government dealing with Finance and administration of the Companies Act. 1956.
  • One member from amongst the officials of the Reserve Bank.
  • Five other members of whom at least three shall be the whole-time members, to be appointed by the Central Government.
• The Central Government shall remove a member from office if he:
  • is or at any time has been adjudicated as insolvent;
  • is of unsound mind and stands so declared by a competent court;
  • Has been convicted of an offence which in the opinion of the Central Government involves a moral turpitude;
  • Has in the opinion of the Central Government so abused his position as to render his continuation in office detrimental to the public interest;
  • Provided that no member shall be removed, unless he has been given a reasonable opportunity of being heard in the matter.
• Subject to the provisions of this Act, it shall be the duty of the Board to protect the interests of investors in securities and to promote the development of and to regulate the securities market by such measures as it thinks fit.
  • Regulating the business in stock exchanges and any other securities markets;
  • Registering and regulating the working of stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and such other intermediaries who may be associated with securities markets in any manner;
  • Registering and regulating the working of (venture capital funds and collective investment schemes) including mutual funds;
  • Promoting and regulating self-regulatory organisations;
  • Prohibiting fraudulent and unfair trade practices relating to securities markets;
  • Promoting investors education and training of intermediaries of securities markets;
  • Prohibiting insider trading in securities;
  • Regulating substantial acquisition of shares and takeover of companies;
  • Calling for information from undertaking inspection, conducting inquiries and audits of the stock exchanges, mutual funds, other persons associated with the securities market, intermediaries and self-regulatory organisations in the securities market;
  • Calling for information and records from any person including any bank or any other authority or board or corporation established or constituted by or under any Central or State Act which, in the opinion of the Board, shall be relevant to any investigation or inquiry by the Board in respect of any transaction in securities;
  • Calling for information from, or furnishing information to, other authorities, whether in India or outside India, having functions similar to those of the Board, in the matters relating to the prevention or detection of violations in respect of securities laws, subject to the provisions of other laws for the time being in force in this regard;
  • Performing such functions and exercising such powers under the provisions of the Securities Contracts (Regulation) Act. 1956 (42 of 1956), as may be delegated to it by the Central Government.
  • Levying fees or other charges for carrying out the purposes of this section;
  • Conducting research for the above purposes.
• SEBI-FMC merger:
  • SEBI was set up in 1988 as a non-statutory body for regulating the securities markets, while it became an autonomous body in 1992 with fully independent powers. Forward Markets Commission, on the other hand, had been regulating commodities markets since 1953.
  • The Government opted for merger of the two regulators since both commodity derivatives and security derivatives have similar economic purposes of hedging, efficient price discovery and risk management and have close resemblance in so far as trade practices and mechanisms are concerned.
  • FMC’s merger with SEBI is aimed at streamlining the regulations and curb wild speculations in the commodities market, while facilitating further growth.

Proposed Amendments to SEBI Act and Autonomy

• The Govt, proposed amendments to the SEBI Act through Finance Bill, 2019.
• It states, SEBI would constitute a Reserve Fund and 25% of the annual surplus of the General Fund would be put in the Reserve Fund.
• The size of such Reserve Fund cannot exceed the total of annual expenditure of the preceding 2 financial years.
• The surplus of the General Fund after factoring in all the SEBI expenses and the transfer to the Reserve Fund needs to be transferred to the Consolidated Fund of India.
• The proposal is also to seek, Govt, approval for capital expenditure, which can range from:
  • Setting up IT infrastructure.
  • Expanding the organisational capacity.
  • Any other physical or soft infrastructure.
  • Increasing its employees’ strength.

General Fund of SEBI

• The General Fund of SEBI is over Rs. 3,000 Cr.
• It is used to meet the expenses of a regulatory body including, salaries and allowances.
• The fund gets money by the charges that SEBI levies on market participants in the form of registration or processing fees.
• Since inception, SEBI is subjected to CAG audit, not a single instance of financial imprudence is observed.
• Incidentally, all the penalties levied by the SEBI already go to the Consolidated Fund of India (CFI). Similarly , settlement amounts are also credited to the CFI.

Centre Plans to give more Powers to Finance Ministry

• Centre thinks that it can do a better job of regulating the economy by consolidating all existing power under the Finance Ministry.
  • But, such centralisation of powers will be risky.
  • Regulatory agencies, such as SEBI needs to be given full powers over their assets. They should be made accountable to the Parliament.
  • If the powers are subsumed by the Centre, it will certainly affect their credibility.

Reasons for Opposition to the Amendments to SEBI Act through the Finance Bill

• Employees’ Association says, the proposal is regressive, since SEBI does not have any mandate to raise revenue for the Govt.
• SEBI Chairman said, they are against the spirit of the SEBI Act.
• It will affect autonomy of a regulatory institution like SEBI, which negatively impacts its ability to function effectively towards its stated objectives and also hampering the progress of securities market.
• A regulatory agency that is at the mercy of the Centre to run financial and administrative operations cannot be truly independent.
• The lack of financial autonomy can affect SEBI’s plans to improve the quality of its operations by investing in new technologies and other requirements to upgrade market infrastructure. The requirement of Government approval for capital expenditure would rather slow down decision-making and would be contrary to the principle of minimum Government, maximum governance.

This can affect the health of India’s financial markets in the long run.

• The Insurance Regulatory and Development Authority of India or the IRDAI is the apex body responsible for regulating and developing the insurance industry in India. It is an autonomous body. It was established by an act of Parliament known as the Insurance Regulatory and Development Authority Act, 1999. Hence, it is a statutory body.
• Objectives:
  • To protect the interest of and secure fair treatment to policyholders;
  • To bring about speedy and orderly growth of the insurance industry (including annuity and superannuation payments) for the benefit of the common man and to provide long term funds for accelerating growth of the economy;
  • To set, promote, monitor and enforce high standards of integrity, financial soundness, fair dealing and competence of those it regulates;
  • To ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery;
  • To promote fairness, transparency and orderly conduct in financial markets dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players;
  • To take action where such standards are inadequate or ineffectively enforced;
  • To bring about optimum amount of self-regulation in day-to-day working of the industry consistent with the requirements of prudential regulation.
• Insurance Laws (Amendment) act, 2015 will remove archaic and redundant provisions in the legislations and incorporates certain provisions to provide Insurance Regulatory and Development Authority of India (IRDAI) with the flexibility to discharge its functions more effectively and efficiently. It also provides for enhancement of the foreign investment cap in an Indian Insurance Company from 26% to an explicitly composite limit of 49% with the safeguard of Indian ownership and control.
• Capital Availability: In addition to the provisions for enhanced foreign equity, the amended law will enable capital raising through new and innovative instruments under the regulatory supervision of IRDAI.
• Empowerment of IRDAI: The Act will entrust responsibility of appointing insurance agents to insurers and provides for IRDAI to regulate their eligibility, qualifications and other aspects. It enables agents to work more broadly across companies in various business categories; with the safeguard that conflict of interest would not be allowed by IRDAI through suitable regulations. IRDAI is empowered to regulate key aspects of Insurance Company operations in areas like solvency, investments, expenses and commissions and to formulate regulations for payment of commission and control of management expenses. It empowers the Authority to regulate the functions, code of conduct, etc, of surveyors and loss assessors. It also expands the scope of insurance intermediaries to include insurance brokers, re-insurance brokers, insurance consultants, corporate agents, third party administrators , surveyors and loss assessors and such other entities, as may be notified by the Authority from time to time. Further, properties in India can now be insured with a foreign insurer with prior permission of IRDAI; which was earlier to be done with the approval of the Central Government.
• Promoting Reinsurance Business in India: The amended law enables foreign reinsurers to set up branches in India and defines ‘re-insurance’ to mean “the insurance of part of one insurer’s risk by another insurer who accepts the risk for a mutually acceptable premium”, and thereby excludes the possibility of 100% ceding of risk to a re-insurer, which could lead to companies acting as front companies for other insurers. Further, it enables Lloyds and its members to operate in India through setting up of branches for the purpose of reinsurance business or as investors in an Indian Insurance Company within the 49% cap.
• Robust Appellate Process: Appeals against the orders of IRDAI are to be preferred to SAT as the amended Law provides for any insurer or insurance intermediary aggrieved by any order made by IRDAI to prefer an appeal to the Securities Appellate Tribunal (SAT).

• The Competition Commission of India (CCI) was established in 2003 under the Competition Act. 2002, with the objective of eliminating practices having an adverse effect competition, promoting and sustaining competition, protecting the interest of consumers and ensuring freedom of trade in India.
• The Competition Act, 2002 was enacted in 2003 as a modern economic law and the Act has since been amended thrice in the years 2007, 2009 and 2017.
• In 2002, amendments relating to anti-competitive agreements were brought and abuses of dominant position were brought into force from May, 2009 and those relating to combinations from 2011.
• The Amendment of 2007 provided for two separate institutions namely, a quasi-judicial body i.e., the Competition Commission of India (the Commission) for the administration of the Act and the Competition Appellate Tribunal (COMPAT) to hear and dispose of appeals against any direction issued or decision made or order passed by the Commission. Pursuant to the amendment of 2009, all pending cases and pending investigations with MRTP Commission were transferred to COMPAT and CCI respectively and the MRTP Act was repealed. An amendment was effected to the Act in 2017, vide Finance Act. 2017, and the National Company Law Appellate Tribunal (NCLAT) became the appellate tribunal in place of erstwhile COMPAT since 26th May, 2017.
• Its objectives are:
  • Preventing practices having adverse effect on competition,
  • Promoting and sustaining competition in markets,
  • Protecting the interests of consumers, and
  • Ensuring freedom of trade carried on by other participants in markets in India.
• The Commission got its enforcement and regulatory power after the substantive provisions of the Act relating to anti-trust enforcement and regulation of combinations came into force in the years 2009 and 2011 respectively.
• The substantive provisions of the Act namely, Anticompetitive agreements (Section 3) and Abuse of dominant position (Section 4) came into force with effect from May 20, 2009. The provisions relating to ‘Regulation of Combinations’ (sections 5 and 6) came into force on June 01, 2011. Anti-competitive agreements and abuse of dominance are considered as potential impediments to free and fair competition in the markets and penalty is imposed wherever the Commission concludes that the enterprise has/ had indulged in anti-competitive practices resulting in Appreciable Adverse Effect on Competition. Regulation of combinations aim at ex-ante screening of mergers, amalgamations and acquisition of control for any possible anti-competitive effects.
• Under Section 49 of the Act the Commission is mandated to undertake competition advocacy. Competition advocacy is about sensitizing the market players and other market participants on the nuances of competition law; and creating awareness and imparting training about the benefits of competition to the stakeholders. Under Section 49(1) of the Act the Central or the State Governments may make reference of any policy to the Commission for its opinion on matter related to competition. Similarly, the Act also provides for a reference by/to Statutory Authorities (Regulatory Institutions) under Sections 21 and 21A of the Act.

The Competition Law Review Committee

The Competition Law Review Committee under the Chairmanship of Mr. Injeti Srinivas submitted its report to the Ministry of Corporate Affairs on July 26, 2019 recommending amendments to the Competition Act, 2002.

• Governing body: The Act is to be amended to provide for a governing body, to strengthen the accountability of the Competition Commission of India. The governing body will consist of a Chairperson, six whole time members, and six part-time members. It will perform quasi-legislative functions, drive policy decisions, and perform a supervisory role.
• Investigation:Under the Act, the Director General (DG) conducts inquiries into violations of the Act. To improve administrative efficiency, the committee recommended that the office of the DG be subsumed within the CCI.
• Appellate Authority: Under the Act, appeals against orders of the CCI are heard by the National Company Law Appellate Tribunal. The Act requires speedy disposal of such appeals, preferably, within a period of six months. However, the Committee noted that the Tribunal is overburdened with cases. Therefore, a dedicated bench should be created to hear appeals under the Act.
• Speedy Resolution: The committee recommended that the Act be amended to empower CCI to allow settlements and commitments for certain types of anti-competitive agreements (like exclusive supply agreements) and for abuse of dominance.
• Greenchannelnotifications:Underthe Act, combinations beyond a certain threshold require the approval of CCI. The Committee recommended a ‘green channel’ route for automatic approval of CCI for specific merger and acquisition cases, where there are no major concerns of an appreciable adverse effect on competition.
• Material influence for determining control: The Act regulates combinations through methods such as mergers or amalgamations of two enterprises, or through acquisition of shares, voting rights or control over an enterprise. The Committee recommended introducing a ‘material influence’ standard to determine what amounts to ‘control’.
• Time limits for merger assessment: The Combination regulations notified under the Act require the CCI to provide its preliminary opinion on whether the combination will have an appreciable adverse effect on competition, within 30 days. The Committee recommended that the Act be amended to include this timeline for all combinations (except for green channel combinations).
• Hub and spoke cartels: The Act does not directly address cartels where a third party (a ‘hub’) facilitates collusion between two or more competitors (the ‘spokes’) by causing sharing of sensitive information between them. It recommended amendments to the Act to include liability of such hubs.
• Penalties:The Committee noted that the rate of recovery of penalties under the Act is low because several CCI orders are challenged before courts. The Committee recommended that CCI should be mandated to issue guidance on calculation and imposition of penalties under the Act.

• The Telecom Regulatory Authority of India (TRAI) was established under the Telecom Regulatory Authority of India Act, 1997 to regulate the telecommunication services. Its establishment was considered necessary in the context of liberalisation and private sector participation in the telecom sector and to provide a level playing field for all operators.
• The TRAI Act was amended by an ordinance, effective from 24 January 2000, establishing a Telecommunications Dispute Settlement and Appellate Tribunal (TDSAT) to take over the adjudicatory and disputes functions from TRAI. TDSAT was set up to adjudicate any dispute between a licensor and a licensee, between two or more service providers, between a service provider and a group of consumers and to hear and dispose of appeals against any direction, decision or order of TRA .
• TRAI’s mission is to create and nurture conditions for growth of telecommunications in the country in a manner and at a pace which will enable India to play a leading role in emerging global information society.
• One of the main objectives of TRAI is to provide a fair and transparent policy environment which promotes a level playing field and facilitates fair competition.
• Its functions can be broadly summarised as:
  • Make recommendations, either suo motu or on a request from the licensor, on the following matters, namely;
  • Need and timing for introduction of new service provider;
  • Terms and conditions of licence to a service provider;
  • Revocation of licence for non-compliance of terms and
  • Conditions of licence;
  • Measures to facilitate competition and promote efficiency
  • In the operation of telecommunication services so as to facilitate growth in such services;
  • Technological improvement in the services provided by the service providers;
  • Type of equipment to be used by the service providers after inspection of equipment used in the network;
  • Measures for the development of telecommunication technology and any other matter relatable to telecommunication industry in general;
  • Efficient management of available spectrum;
  • Fix the terms and conditions of inter-connectivity between the service providers;
  • Levy fees and other charges at such rates and in respect of such services as may be determined by Regulations;
  • Perform such other functions including such administrative and financial functions as may be entrusted to it by the Central Government or as may be necessary to carry out the provisions of this Act.

• It is a statutory body functioning under the Electricity Act, 2003. It was initially constituted under the Electricity Regulatory Commissions Act, 1998.
• The CERC intends to promote competition, efficiency and economy in bulk power markets, improve the quality of supply, promote investments and advise the Government on the removal of institutional barriers to bridge the demand supply gap and thus foster the interests of consumers.
• Its functions are:
  • To regulate the tariff of generating companies owned or controlled by the Central Government
  • To regulate the tariff of generating companies other than those owned or controlled by the Central Government
  • To regulate the inter-state transmission of electricity
  • To determine tariff for inter-state transmission of electricity and
  • To issue licenses to persons to function as transmission licensee and electricity trader with respect to their inter-state operations.

• The Medical Council of India was a statutory body for establishing uniform and high standards of medical education in India until its dissolution on 25 September 2020 when it was replaced by National Medical Commission.
  • It was established in 1934 under the Indian Medical Council Act, 1933, now repealed, with the main function of establishing uniform standards of higher qualifications in medicine and recognition of medical qualifications in India and abroad. The number of medical colleges had increased steadily during the years after Independence. It was felt that the provisions of Indian Medical Council Act were not adequate to meet with the challenges posed by the very fast development and the progress of medical education in the country. As a result, in 1956, the old Act was repealed and a new one was enacted. This was further modified in 1964, 1993 and 2001.
• The objectives of the Commission are as follows:
  • Maintenance of uniform standards of medical education both undergraduate and postgraduate.
  • Recommendation for recognition/de-recognition of medical qualifications of medical institutions of India or foreign countries.
  • Permanent registration/provisional registration of doctors with recognized medical qualifications.
  • Reciprocity with foreign countries in the matter of mutual recognition of medical qualifications.

1. In 2003, Interim Pension Fund Regulatory & Development Authority (PFRDA) was established through a resolution by the Government of India to promote develop and regulate pension sector in India. In 2013, it was made a statutory body and the same was notified in 2014.
2. PFRDA is regulating National Pension System (NPS), subscribed by employees of Govt, of India, State Governments and by employees of private institutions/organizations & unorganized sectors. The PFRDA is ensuring the orderly growth and development of pension market.
3. Section 14 of the PFRDA Act, 2013 lays down the duties, powers and functions of the Authority:
   • to regulate, promote and ensure orderly growth of the National Pension System and pension schemes,
   • to protect the interests of subscribers of such system and schemes,
   • to be a model Regulator for promotion and development of an organized pension system to serve the old age income needs of people on a sustainable basis.

Enforcement Directorate

• Directorate of Enforcement is a Multi-Disciplinary Organization mandated with the task of enforcing the provisions of two special fiscal laws – Foreign Exchange Management Act, 1999 (FEMA) and Prevention of Money Laundering Act, 2002 (PMLA).
• Besides directly recruiting personnel, the Directorate also draws officers from different Investigating Agencies, viz. Customs & Central Excise. Income Tax. Police, etc., on deputation.
• With the onset of the process of economic liberalization FERA 1973, which was a regulatory law was repealed and in its place, effective 1st June, 2000 a new law – Foreign Exchange Management Act, 1999 (FEMA) came into operation. Further, in tune with the International Anti Money Laundering regime. Prevention of Money Laundering Act, 2002 (PMLA) was enacted and entrusted for its enforcement to the Directorate, w.e.f 01-07-2005.
• Carved in the role of a multi-dimensional Organisation, the Directorate enforces two laws; FEMA , a Civil Law having quasi-judicial powers, for investigating suspected contraventions of the Exchange Control Laws and Regulations with the powers to impose penalties on those adjudged guilty and PMLA, a Criminal Law, whereby the Officers are empowered to conduct enquiries to locate, provisionally attach/ confiscate assets derived from acts of Schedules Offences besides arresting and prosecuting the Money Launderers.
• The main functions of the Directorate are as under
  • Investigate contraventions of the provisions of Foreign Exchange Management Act, 1999 (FEMA) which came into force with effect from 1-6-2000. Contraventions of FEMA are dealt with by way of adjudication by designated authorities of ED and penalties upto three times the sum involved can be imposed.
  • Investigate offences of money laundering under the provisions of Prevention of Money Laundering Act, 2002 (PMLA) which came into force with effect from 1-7-2005 and to take actions of attachment and confiscation of property if the same is determined to be proceeds of crime derived from a Scheduled Offence under PMLA, and to prosecute the persons involved in the offence of money laundering. There are 156 offences under 28 statutes which are Scheduled Offences under PMLA.
  • Adjudicate Show Cause Notices issued under the repealed Foreign Exchange Regulation Act, 1973 (FERA) up to 31-5-2002 for the alleged contraventions of the Act which may result in imposition of penalties. Pursue prosecutions launched under FERA in the concerned courts.
  • Sponsor cases of preventive detention under Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA) in regard to contraventions of FEMA.
  • Render cooperation to foreign countries in matters relating to money laundering and restitution of assets under the provisions of PMLA and to seek cooperation in such matters.

• The legislative foundation of India’s financial sector is too complex and cumbersome. These legislations, of which many are out dated – with occasional, piecemeal amendment, do not provide a holistic framework for the harmonious development of the financial sector there is an urgent need for an overhaul of the legislativeregulatory framework of the financial sector.
• The regulatory architecture is too fragmented, leaving substantial scope for grey areas and overlaps, capture and bargaining.
• The current architecture is not conducive enough for addressing the issuese manating from the global context of financial development. Fragmented regulation and regulatory responsibilities and lack of clarity would hinder both domestic and global co-ordination efforts in addressing issues of contagion and global financial shocks. There is a need for strengthening the fundamental architecture in addressing such issues as well as for evolving a framework for dealing with systemic risk and resolution.
• There is a need for strengthening the consumer protection and grievance redress mechanism in the financial sector. This is particularly important given the low level of financial literacy, low penetration of financial services, absence of clear regulatory mandate on composite and complex products and on the roles of product distributors and financial advisers. Given the complexity of these issues, the main focus was on the necessity of placing consumer protection at the centre of the philosophy on financial regulation. This issue needs to be addressed both from the preventive and curative sides; by the regulators as well as the redress agency, respectively.
• The current architecture encourages turf battles and conflicts of interest. This is a result of the lack of clarity of functions of the various regulatory authorities as well as of assigning conflicting functions to the same regulatory agency. Despite the explicit development objectives given to the sector-specific regulators, market development has been far from satisfactory as is evidenced in the time-frame on developing products and systems such as in the corporate bond markets.
• While every regulator should encourage competition in their sector, the ultimate responsibility of managing economy-wide competition issues should be lead to the Competition Commission. While this would help address many macro-level consumer issues, such micro-level issues should be addressed by the sector specific regulators and the grievance redress fora/forum. There should be greater and institutionalised, interface between the Competition Commission and sectoral regulators in promoting competition and competition practices and culture.
• Key principles:
  • Accountability is best achieved when an agency has a clear purpose. The traditional Indian notion, that a regulator has powers over a sector but lacks specific objectives and accountability mechanisms is an unsatisfactory one.
  • Conflicts of interest in particular, direct conflicts of interest are harmful for accountability and must be avoided.
  • A complete picture of firms A financial regulatory architecture that enables a comprehensive.
  • View of complex multi-product firms and thus a full understanding of the risks that they take is desirable.
  • Avoiding sectoral regulators When a financial regulator works on a sector, there is a possibility of an alignment coming about between the goals of the sector (growth and profitability) and the goals of the regulator. The regulator then tends to advocate policy directions which are conducive for the growth of its sector. Such problems are less likely to arise when a regulatory agency works towards an economic purpose such as consumer protection across all or at least many sectors.
  • Economies of scale in Government agencies In India, there is a paucity of talent and domain expertise in Government, and constructing a large number of agencies is relatively difficult from a staffing perspective. It is efficient to place functions that require correlated skills into a single agency.
  • Transition issues is useful to envision a full transition into a set of small and implementable measures.
  • The Commission proposes a financial regulatory architecture financial regulatory architecture featuring seven agencies. This proposal features seven agencies and is hence not a ‘unified financial regulator’ proposal. The existing RBI will continue to exist, though with modified functions:
    • The existing SEBI, FMC, IRDA and PFRDA will be merged into a new unified agency.
    • The existing Securities Appellate Tribunal (SAT) will be subsumed into the FSAT.
    • The existing Deposit Insurance and Credit Guarantee Corporation of India (DICGC)will be subsumed into the Resolution Corporation.
    • A new Financial Redressal Agency (FRA) will be created.
    • A new Debt Management OICE will be created.
    • The existing FSDC will continue to exist, though with modified functions and a statutory framework.
• Following functions are proposed:
  • Reserve Bank of India: It is proposed that RBI will perform three functions; monetary policy, regulation and supervision of banking in enforcing the proposed consumer protection law and the proposed micro-prudential law, and regulation and supervision of payment systems in enforcing these two laws.
  • Unified Financial Agency: The unified financial regulatory agency would implement the consumer protection law and micro-prudential law for all financial firms other than banking and payments. This would yield benefits in terms of economies of scope and scale in the financial system; it would reduce the identification of the regulatory agency with one sector; it would help address the difficulties of finding the appropriate talent in Government agencies. This proposed unified financial regulatory agency would also take over the work on organised financial trading from RBI in the areas connected with the Bond-Currency Derivatives Nexus and from FMC for commodity futures, thus giving a unification of all organised financial trading including equities, government bonds, currencies, commodity futures and corporate bonds. The unification of regulation and supervision of financial firms such as mutual funds, insurance companies and a diverse array of firms which are not banks or payment providers, would yield consistent treatment in consumer protection and micro-prudential regulation across all of them.
  • Financial Sector Appellate Tribunal: The present SAT will be subsumed in FSAT, which will hear appeals against RBI for its regulatory functions, the unified financial agency, decisions of the FRA and some elements of the work of the resolution corporation.
  • Resolution Corporation: The present DICGC will be subsumed into the Resolution Corporation which will work across the financial system. Financial Redressal Agency: The FRA is a new agency which will have to be created in implementing this financial regulatory architecture. It will setup a nationwide machinery to become a one stop shop where consumers can carry complaints against all financial firms.
  • Public Debt Management Agency: An independent debt management office is envisioned.
  • Financial Stability and Development Council: Finally, the existing FSDC will become a agency and have modified functions in the fields of systemic risk and development.

Role of BEE

BEE co-ordinates with designated consumers, designated agencies and other organizations and recognize, identify and utilize the existing resources and infrastructure, in performing the functions assigned to it under the Energy Conservation Act. The Energy Conservation Act provides for regulatory and promotional functions.

• The Tribunal’s dedicated jurisdiction in environmental matters shall provide speedy environmental justice and help reduce the burden of litigation in the higher courts. The Tribunal is mandated to make and endeavour for disposal of applications or appeals finally within 6 months of filing of the same. Initially, the NGT is proposed to be set up at five places of sittings and will follow circuit procedure for making itself more accessible. New Delhi is the Principal Place of Sitting of the Tribunal and Bhopal, Pune , Kolkata and Chennai shall be the other four place of sitting of the Tribunal.

The Press Council of India was first constituted on 4th July, 1966 as an autonomous, statutory, quasi-judicial body, with Shri Justice J R Mudholkar, then a Judge of the Supreme Court , as Chairman. The Press Council Act, 1965, listed the following functions of the Council in furtherance of its objects:

• To help newspapers to maintain their independence.
• To build up a code of conduct for newspapers and journalists in accordance with high professional standards.
• To ensure on the part of newspapers and journalists the maintenance of high standards of public taste and foster a due sense of both the rights and responsibilities of citizenship.
• To encourage the growth of a sense of responsibility and public service among all those engaged in the profession of journalism.
• To keep under review any development likely to restrict the supply and dissemination of news of public interest and importance
• To keep under review such cases of assistance received by any newspaper or news agency in India from foreign sources, as are referred to it by the Central Government.

Highlights of Food Safety and Standard Act, 2006

• Various central Acts like Prevention of Food Adulteration Act,1954, Fruit Products Order, 1955, Meat Food Products Order,1973. Vegetable Oil Products (Control) Order, 1947,Edible Oils Packaging (Regulation)Order 1988, Solvent Extracted Oil, DeOiled Meal and Edible Flour (Control) Order, 1967, Milk and Milk Products Order, 1992 etc will be repealed after commencement of FSS Act, 2006.
• The Act also aims to establish a single reference point for all matters relating to food safety and standards, by moving from multi- level, multi-departmental control to a single line of command. To this effect, the Act establishes an independent statutory Authority – the Food Safety and Standards Authority of India with head office at Delhi. Food Safety and Standards Authority of India (FSSAI) and the State Food Safety Authorities shall enforce various provisions of the Act.

Establishment of the Authority

Ministry of Health & Family Welfare, Government of India is the Administrative Ministry for the implementation of FSSAI. The Chairperson and Chief Executive Officer of Food Safety and Standards Authority of India (FSSAI) have already been appointed by Government of India. The Chairperson is in the rank of Secretary to Government of India.

Functions

• Framing of Regulations to lay down the Standards and guidelines in relation to articles of food and specifying appropriate system of enforcing various standards thus notified.
• Laying down mechanisms and guidelines for accreditation of certification bodies engaged in certification of food safety management system for food businesses.
• Laying down procedure and guidelines for accreditation of laboratories and notification of the accredited laboratories.
• To provide scientific advice and technical support to Central Government and State Governments in the matters of framing the policy and rules in areas which have a direct or indirect bearing of food safety and nutrition.
• Collect and collate data regarding food consumption, incidence and prevalence of biological risk, contaminants in food, residues of various, contaminants in foods products, identification of emerging risks and introduction of rapid alert system.
• Creating an information network across the country so that the public, consumers, Panchayats etc receive rapid, reliable and objective information about food safety and issues of concern.
• Provide training programmes for persons who are involved or intend to get involved in food businesses.
• Contribute to the development of international technical standards for food, sanitary and phytosanitary standards.
• Promote general awareness about food safety and food standards.

Power of ASCI

ASCI’s role has been acclaimed by various agencies including the Government. However, it lacked the force of legal recognition. The Government of India has at last, taken note of this and by one stroke on 2nd August 2006 vide a notification in The Gazette of India: Extraordinary {Part II -sec. 3(i)|, made sure that at least as far as TV Commercials go, they abide by ASCI code. The amendment made in Cable Television Networks Rules, 1994 through a Notification dated August 2nd, 2006 now states: “(9) No advertisement which violates the Code for Self-Regulation in Advertising, as adopted by the Advertising Standards Council of India (ASCI), Mumbai for public exhibition in India, from time to time, shall be carried in the cable service”

Key Recommendations

• Regulation only where necessary .
• Regulation to be effective .
• Self-regulation is the best form of regulation.
• Regulatory procedures to be simple transparent and citizen friendly.
• Involving citizens groups, professional organizations in the regulation activities.
• Besides general guidelines to direct the interaction between government departments and regulatory bodies also chart out general guidelines outlining the general roles and objective of regulator.
• Need for greater uniformity in the terms of structure, appointment, tenure and removal of various regulatory authorities.
• Well qualified selection committee to select the candidate for appointment chairman and board members.
• Their tenure should be secure, so that they can perform their task independently and without much pressure.
• Parliamentary oversight through departmental standing parliamentary committee, will ensure proper accountability.
• The annual reports of the regulators should include a report on their performance of independent regulator and should be update periodically.
• Impact assessment by the external agency.