India needs a way to hold autonomous regulators accountable
Subscribe to enjoy similar stories. Two former chairmen of the Securities and Exchange Board of India (Sebi) have, over the last four months, called for studying the impact of regulation, so that it can be factored into decision-making. M.
Damodaran, speaking at the recent Mint BFSI summit, argued that Sebi must convey the rationale of its decisions effectively because regulation must protect investor interests in appearance as well as substance. Earlier, in a Mint op-ed, G.N. Bajpai had suggested four yardsticks for assessing Sebi’s decisions: Clarity of rationale, openness to public scrutiny, the conduct of an independent review, and an economic cost-benefit analysis.
These words of advice are welcome. Independent assessments of Sebi’s calls must routinely be carried out. However, this evokes the question of who would hold Sebi to account—and oblige the regulator to make amends—if a review finds shortcomings.
Right now, there is an institutional vacuum over the accountability of not just Sebi, but most of India’s autonomous regulators. In the case of our market regulator, a good way to plug that gap is to make it accountable to Parliament’s Standing Committee on Finance. A vigilant media and an informed discourse based on its coverage of regulatory action and its impact would be necessary but not sufficient.
Earnest evaluation calls for academic rigour and systematic gathering of evidence. A specialized body like the National Institute of Securities Markets can certainly help. Others like the Indian Institutes of Management and the economics faculties of universities could chip in.
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