 "We cannot have so many regulators: B K Chaturvedi")
B K Chaturvedi, member, Planning Commission, and former cabinet secretary had suggested a slew of measures for reforming the road sector. Years later, the road sector is still struggling and the industry has demanded an independent regulator. In an interview with Manu Balachandran and Sudheer Pal Singh, he reasons why India does not need a regulator for roads.Edited excerpts:
The government has been instrumental in setting up a number of regulators across sectors. Do we need so many regulators?
The private participants and the government should have results in projects they participate in and have a level playing field. That's why we have a regulator for airports, ports and telecom, among others. There is always an entity, which has a dominant status and has a large public interest. In such cases, we wanted the regulator to come. In the case of power discoms, they have always been a dominant entity and we wanted a level playing field in terms of private partnership and also the implementations of laws in the sector.
In the case of road sector, a number of issues have come up in the past few years. We have contractual arrangements in PPP mode and the private sector agrees on concessionaire agreements. Now the choice is whether you want the concessionaire agreements to go to court such as with the Delhi-Gurgaon expressway or to the regulatory authority and let them adjudicate. It's a choice one has to make. In a large number of cases where there have been claims and counter claims for the suggestions that are made for the growth of the sector, the terms that exist need to be changed. And once you bid for a project and accept it, and then look to change it later, I don't think it is a good thing. Internationally, too, this is not a norm. But five-10 years down the line, if there are some problems in the economy, that is a different problem. But if you start doing it initially itself, it is not a good step. This trend should be discouraged.
But the NHAI is a dominant player and is also the signatory and party to various concession agreements. Don't we need a regulator in that case?
That is a good argument. But I have a different view. The NHAI acts a concessionaire and is governed by the concession agreement. If someone violates it, there is a provision for arbitration and go ahead with it. If you feel a provision needs to be changed, one can go ahead and modify it. That is a different case, but here is a concession agreement and if you go for arbitration, the arbitrator will take a call. In the past also, the government built roads and we did not have a regulator then. We cannot have so many regulators. In a concession agreement, concession terms are given and if there is a dispute, it will go to the arbitrator. You can say that the process is delayed and therefore should be streamlined, simplified and changed. I am all on board for making that change, but to say we need a regulator, there is no guarantee that the regulator will address it. I personally don't think we need a regulator. That's my personal view. We should strengthen the arbitration system, otherwise, we will have multiplicity of regulators and secondly, regulators have come in for criticism as well. The best thing is let the law take its course and ensure that there is lesser interference and strengthen the arbitration process.
What is the status of the regulator now?
The Planning Commission has responded to the draft Bill. It may be sent to the Cabinet soon and it is up to them to decide.
How does the overall investment scenario look like for the current Plan period?
The Planning Commission will look at the economic investment projections in the mid-term review. The process is on and the Review will be out in the term of the new government. But the investments will not be as high as were initially expected. In case economic growth picks up, investments will also start picking up. All the policy parameters are in place. The environment ministry has now started clearing projects, stuck for a long time.
The government has been instrumental in setting up a number of regulators across sectors. Do we need so many regulators?
The private participants and the government should have results in projects they participate in and have a level playing field. That's why we have a regulator for airports, ports and telecom, among others. There is always an entity, which has a dominant status and has a large public interest. In such cases, we wanted the regulator to come. In the case of power discoms, they have always been a dominant entity and we wanted a level playing field in terms of private partnership and also the implementations of laws in the sector.
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A large number of road projects are stuck today and the private sector has been seeking a road regulator. How can a road regulator help?
In the case of road sector, a number of issues have come up in the past few years. We have contractual arrangements in PPP mode and the private sector agrees on concessionaire agreements. Now the choice is whether you want the concessionaire agreements to go to court such as with the Delhi-Gurgaon expressway or to the regulatory authority and let them adjudicate. It's a choice one has to make. In a large number of cases where there have been claims and counter claims for the suggestions that are made for the growth of the sector, the terms that exist need to be changed. And once you bid for a project and accept it, and then look to change it later, I don't think it is a good thing. Internationally, too, this is not a norm. But five-10 years down the line, if there are some problems in the economy, that is a different problem. But if you start doing it initially itself, it is not a good step. This trend should be discouraged.
But the NHAI is a dominant player and is also the signatory and party to various concession agreements. Don't we need a regulator in that case?
That is a good argument. But I have a different view. The NHAI acts a concessionaire and is governed by the concession agreement. If someone violates it, there is a provision for arbitration and go ahead with it. If you feel a provision needs to be changed, one can go ahead and modify it. That is a different case, but here is a concession agreement and if you go for arbitration, the arbitrator will take a call. In the past also, the government built roads and we did not have a regulator then. We cannot have so many regulators. In a concession agreement, concession terms are given and if there is a dispute, it will go to the arbitrator. You can say that the process is delayed and therefore should be streamlined, simplified and changed. I am all on board for making that change, but to say we need a regulator, there is no guarantee that the regulator will address it. I personally don't think we need a regulator. That's my personal view. We should strengthen the arbitration system, otherwise, we will have multiplicity of regulators and secondly, regulators have come in for criticism as well. The best thing is let the law take its course and ensure that there is lesser interference and strengthen the arbitration process.
What is the status of the regulator now?
The Planning Commission has responded to the draft Bill. It may be sent to the Cabinet soon and it is up to them to decide.
How does the overall investment scenario look like for the current Plan period?
The Planning Commission will look at the economic investment projections in the mid-term review. The process is on and the Review will be out in the term of the new government. But the investments will not be as high as were initially expected. In case economic growth picks up, investments will also start picking up. All the policy parameters are in place. The environment ministry has now started clearing projects, stuck for a long time.