All Regulators To Get 5-Yr Tenures

[kesav 127]

All regulators to get 5-yr tenures

Law ministry to work out amendments to respective laws

New Delhi: The government wants to bring uniformity in the tenure of the heads of various regulatory bodies and has asked the law ministry to work on comprehensive amendments to the respective laws to make it happen. Currently, while some regulatory heads have three-year tenures, others enjoy five years.

Sources in the government said a uniform tenure could be in place early next year in time for the appointment of new chiefs at the Securities and Exchange Board of India (Sebi) and later in the year at the Reserve Bank of India (RBI), so that both would have five-year terms as opposed to the current three years.

The heads of Sebi, RBI and the Telecom Regulatory Authority of India (Trai) have three-year tenures. RBI governor D Subbarao will complete his term in September 2011 while Sebi chief CB Bhave will complete his tenure in February 2011.

Yashwant Sinha, former finance minister and now chairman of the parliamentary standing committee on finance, said he agreed with the proposal. Not a bad idea at all, he told FE.

Apart from RBI, Sebi and Trai, other regulators including Insurance Regulatory and Development Authority (Irda), Central Electricity Regulatory Commission (CERC) and the Pension Fund Regulatory and Development Authority (PFRDA) enjoy five-year tenures. While Parliament is still to clear the legislation for PFRDA, the government has used the five-year principle here too. The anomaly stems from an earlier approach that favoured a shorter term, though the RBI governor was, at times, reappointed.

If the government is able to enhance the tenure of office of the regulatory heads which currently have a three-year tenure, the new appointees to the post of RBI governor and Sebi chief would be the immediate beneficiaries. However, it is not certain if the tenure of current Trai chairman JS Sarma would also be extended. But in all likelihood, when a new chairman is appointed he would have a five-year term.

Government sources said the decision to have a uniform tenure for all regulatory heads was taken after demands from some of them that their tenure be extended. It doesn't make sense for some regulatory heads to enjoy a longer tenure of office than others. If at all we have to address the issue, it needs to be addressed comprehensively at one go, an official said. As of now, finance minister Pranab Mukherjee has not made his preferences on the subject public.

Noted economist Bibek Debroy too agreed that there should be a longer tenure of five years. “But there should be no extensions,” he said when FE contacted him. “Also, regulatory powers across sectors are widely different, at present. These need to be reconciled,” he added.

The need for more regulators was felt in the mid-to-late nineties, when the government started opening several sectors to competition. Thus, new regulators like Sebi, Trai, Irda and CERC came into being, initially mimicking the terms of RBI. Going ahead, there's every possibility of having regulators in several other sectors; hence, the need to align their tenures and other perks of office.

While RBI and Sebi chiefs had three-year tenures all along, the Trai chairman initially had a five-year tenure which was trimmed to three in 1999 when the new telecom policy was announced by the NDA government which was in power then.

Trai's then chairman Nripendra Misra moved a note to the department of telecommunications in 2006 to enhance the tenure of the telecom regulator in line with the heads of regulatory bodies like the CERC and Irda....

source :: http://www.financialexpress.com/news/All-regulators-to-get-5-yr-tenures/702414/

If the above move materializes then TRAI chairman's tenure will be of 5-yr instead of current 3-yr term.

Good move by Govt. It'll bring more stability at the regulator level and TRAI will get more powerful with more long term policy roadmaps.

:clap:

Edited October 25, 2010 by kesav