A K Bhattacharya: Exclusively reserved for babus

RAISINA HILL

Bureaucrats almost always manage to monopolise the top jobs in regulatory bodies.

Traditionally, the civil service has always enjoyed a near monopoly over top regulatory jobs. The present governor of the Reserve Bank of India was an IAS officer, but he joined the central bank only after quitting his service. So, he is an exception. But take a look at all other regulators "" they are either retired bureaucrats or are serving IAS officers on deputation.

Every time the top slot in a regulatory body has to be filled, this issue comes up: why should a retired or serving civil servant be considered for the regulator's job? The question is tossed around for a debate, but no answer emerges from the discussion. And at the end of it all, one sees a civil servant again in the role of a regulator.

There is a civil servant's side of the story, which is not always talked about in this debate. Civil service proponents argue that there is no reason why a bureaucrat, given his varied experience and administrative expertise, should be ruled out from the process of selecting a regulator. It is the same argument that is put out when the Public Enterprises Selection Board scouts for the CEO of a public sector undertaking. But the fact is that there is a hidden bias in the favour of a civil servant, when he joins the race for a job in a PSU. He is seen as a representative of a PSU's majority shareholder and rarely has the PESB turned the candidature of a civil servant. The results are there for all to see.

When it comes to appointing a regulator, the civil servant has less of a claim on the job. Yet, he is considered a favourite. The RBI has seen several retired civil servants as its governor. The Securities and Exchange Board of India (Sebi) has seen only two chairmen so far who do not belong to the civil service. The Telecom Regulatory Authority of India began well, but soon became the sole preserve of civil servants. The central electricity regulator too has a retired civil servant as a regulator. The same is the story for the insurance regulator. And even though the pension regulator has not been statutorily created as yet, a retired civil servant is already in place.

The logical question that arises is: aren't there enough competent people outside the civil services, who could head a regulatory body? And the bigger and more relevant question is, why doesn't the government make an attempt to rope in such professionals with an attractive package? After all, an independent professional would not mind heading such a body because freedom of action is assured within the broad parameters of the statute laid down by the Parliament.

The problem is three-fold. One, even though the law guarantees independence for the regulator, the government always expects the head of a regulatory body to keep in mind the government's interests. So, a truly independent regulator is likely to get involved in controversies over his relationship with the government, the prospect of which is not what many professionals cherish. Then, the process of selecting a regulator is still shrouded in relative mystery. The selection process is not transparent. There isn't as yet a professional recruitment body that invites applications from all candidates interested in the regulator's job. Even a PESB-type selection process is not always followed. So, how can the available private sector pool of talents be tapped?

And lastly, and most crucially, the compensation package is so unattractive that only retired civil servants are encouraged to take on such responsibilities. And serving bureaucrats opt for them on deputation because that helps them to spend the quota of years when they are supposed to be in their states before returning to New Delhi for a stint at the centre. A few years ago, the government did indeed zero in on a private sector person to head one of the regulatory bodies. But the talks could not proceed beyond a point because of the salary.

So, if the government is serious about creating a strong network of independent regulators, it should first create an independent selection mechanism and put in place a more attractive pay package for regulators. That will mean some progress as far as creating an independent regulatory system is concerned.