Crippled by fiat!

16 Mar 2000

The promulgation of the Telecom Regulatory Authority of India (Amendment) Ordinance, 2000 has been hailed as a positive step towards strengthening the telecom regulator. It must be said to the credit of the ordinance that for the first time, the objectives of the legislation have been clearly spelt out. Furthermore, for the first time, the ordinance recognises the growing convergence of technologies, and has rightly included broadcasting services within the meaning of telecommunication services. The Ordinance gives TRAI the necessary powers to fix the terms and conditions of interconnectivity between the service providers. It has set at rest the controversy between the CAG and TRAI by limiting the areas for CAG?s audit scrutiny. It has created a Telecom Disputes Settlement and Appellate Tribunal to adjudicate disputes, although it is not clear as to why TRAI itself could not have been the adjudicator. After all, the CERC (Central Electricity Regulatory Commission) created under the ERC Act 1998, regulates the interstate transmission of energy, and also adjudicates disputes between service providers. In any event, these amendments are welcome. But, has the Ordinance really strengthened TRAI? A careful analysis would show that while needless controversies between TRAI and DoT and others have been finally put to rest, TRAI in the process has not been strengthened, but weakened. In terms of its powers, the original Act of 1997 mandated TRAI to facilitate competition and promote efficiency in the operation of telecommunication services so as to facilitate growth in such services: this has now been made recommendatory. One of the basic objectives of independent regulation, not only in India but the world over, was to bring consumer interests to the fore, and mandate the regulator to protect consumer interests, which is what the old Act of 1997 did under Section 11 (1) (i). The Ordinance (Section 11(b)(v)) now restricts TRAI?s role in protecting consumer interests only as far as quality is concerned, leaving it vague as to whether or not TRAI is required to protect consumer interests as far as, say, tariff is concerned. Again, the world over it is recognised that a regulator should be outside government and independent of it to be effective, and that such independence should be ensured by protecting the regulator from being removed easily. The old Act required the government to consult the Supreme Court before removing a regulator from office, whereas now all that the government has to do is to give him an opportunity to be heard. Another important safeguard to ensure independence is to give the regulator the freedom to fix salaries or allowances of its employees in order to attract the best expertise in the market. After all, the rationale for independent regulation is that regulation needs expertise of the kind not usually available in government, and that expertise cannot be hired or retained at civil service salaries. TRAI was earlier free to fix salaries and allowances, but this power has now been taken away by the Ordinance. What is more fundamental, is that the Ordinance has by one stroke of the pen established that a government, under any pretext, can totally dismantle a regulatory institution, remove from office regulators in place, and alter the regulator?s tenures or its jurisdiction without public debate or parliamentary approval. While the government may have found the ordinance an expedient measure to set right problems that its own agencies created, this one move could send out wrong signals to international investors that there is no sanctity to regulatory institutions and processes in India. It is not without reason that six of the seven regulators in office, although eligible, have not been re-appointed! In the ultimate analysis, the Ordinance while clarifying the confusion resulting from a poorly drafted legislation, has left TRAI a truncated body and with the warning that should TRAI or other regulators assert their independence there could be more Ordinances. We had earlier in these columns argued that Government should have a consistent approach to regulation. We are now glad that there is no consistency and that the Ministry of Power has not thought it necessary to ?strengthen? the CERC with similar changes. Perhaps, that would happen when the NTPC clashes with the CERC!
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