FSDC enlarged to include MoS, revenue secretary amid rising oil prices

Also included is Meity secretary in the wake of data security issues

The government has expanded the Financial Stability and Development Council (FSDC), a body of financial sector regulators, the finance minister and key financial bureaucrats, by including the minister of state for finance, as well as two more secretaries in it. 

Almost a year after the goods and services tax (GST) was rolled out, the government has included the revenue secretary (currently, Hasmukh Adhia) in FSDC.

FSDC, which looks at any headwinds or parameters that have potential to disturb financial stability, included the revenue secretary at a time when the crude hovering around $80 a barrel threatens to disturb key macroeconomic parameters -- be it the current account deficit, the fiscal deficit or inflation. However, the government has downplayed its adverse impact, except on CAD.

The importance of data security and digital transactions also prompted the government to include the secretary of the ministry of information technology (currently Ajay Prakash Sawhney).

Given the massive digitisation push in the country, both public and private sectors are collecting and using personal data on an unprecedented scale and for multiple purposes.

Last year, the government had set up a committee under Justice B N Srikrishna to provide a framework for securing personal data in the increasingly digitised economy. It was also mandated to address privacy concerns and build safeguards against data breaches.

The Information Technology (IT) Act has provisions to deal with cybercrime and data protection, but the spike in cashless transactions in the country post demonetisation and an increasing number of businesses going online have necessitated the need for a fresh look at data privacy issues.

A few months back, US based social networking giant Facebook and British data analytics firm Cambridge Analytica drew flak over a massive global data breach episode involving millions of Facebook users.

Back home, amid data privacy concerns over the use of biometric Aadhaar, the Supreme Court earlier this month reserved its verdict on a batch of petitions challenging the constitutional validity of Aadhaar and its enabling 2016 law. 

The Council would now also include the minister of state for the Department of Economic Affairs (DEA), currently P Radhakrishnan. Financial markets division, foreign investment division etc -- all the key divisions important to sustain financial stability--are under the DEA. 

Earlier in 2017, the government had inducted the corporate affairs secretary and insolvency board chairman into FSDC.

Besides the finance minister, the other members of the body are -- RBI governor, finance secretary, financial services secretary, chief economic advisor, and heads of SEBI, IRDAI and PFRDA.

In fact, FSDC was born in 2010 amid much controversy. The Reserve Bank of India had its own reservations that the body would undermine the autonomy of financial regulators since the finance minister was to be the chairperson. In fact, the issue of a turf war between the regulators was also the prime reason to constitute the body.

In June 2010, the Union government promulgated an ordinance to settle turf battles between these regulators. A joint committee headed by the finance minister and composed of the heads of the regulatory agencies would resolve such disputes. The move followed a turf war between the capital market and insurance regulators.

Around that time, the government also circulated a discussion paper on FSDC. These developments made RBI restive as it felt autonomy of financial sectors would be compromised. 

FSDC was not set up as a super-regulator. To coax RBI, it was made the head of one of the two committees on regulatory coordination. The other committee was on financial stability under the finance secretary.  

In fact, FSDC was proposed by a committee in 2008, headed by Raghuram Rajan, who was to become the RBI governor later.

Since 2010, the FSDC has held 18 meetings with the latest on December 29, 2017.