Regulatory Autonomy: A different perspective

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M G Warrier
January 22, 2019
Regulatory autonomy

This refers to the article “The many nuances of regulatory autonomy” (The Hindu Business Line, January 22). Though couched in somewhat technical language, GN Bajpai has thrown light on certain grey areas in the relationship between GOI, statutory bodies and organisations owned/controlled by government. Media interpretations of the differences in policy perceptions between GOI and RBI had created an impression that the three predecessors of the present RBI Governor Shaktikanta Das were fighting for independence from GOI whereas all they talked about was functional autonomy in policy formulation and implementations within the contours of statute book. No governor in the history of RBI had ever threatened the GOI that he would operate monetary policy parallel to fiscal policy. The definitions of regulatory state and regulatory craft have corrected the public perceptions on this issue.
The basic issues responsible for the recent GOI-RBI spar need to be addressed by the political leadership in public interest as they are cancerous and have spread to the functional freedom of all organizations which handle money in India. Simply put, they arise from finance ministry’s inept handling of fiscal deficit. To cover up its own imprudent management of nation’s monetary resources, it has become habitual for finance ministry to use the GOI’s ‘ownership rights’ over statutory bodies and PSUs to force funds diversification to Consolidated Fund of India. The methods include (a) asking institutions like LIC to retain liquid funds to be available at call for diversion, (b) forcing PSUs and statutory bodies to inflate surplus income and declare dividends 9a stage has come when ‘advance against future dividends’ is demanded from organizations like RBI).
Solution lies in mapping nation’s wealth remaining unaccounted and considering a realistic taxation policy which should cover high income groups and agricultural income.

M G Warrier, Mumbai


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