The significance of regulatory bodies becomes more apparent for early recovery and mitigation of crisis emanating from Covid-19. Discuss.
A regulatory body also called regulatory agency is a public authority or a government agency which is accountable for exercising autonomous authority over some area of human activity in a regulatory or supervisory capacity. It is established by legislative act in order to set standards in a specific field of activity, or operations, in the private sector of the economy and to then implement those standards.
- Over a period of time, a number of regulatory bodies, ranging from RBI, SEBI, IRDA, PFRDA to TRAI, electricity regulators, CCI, FDA have been set up in India.
- There is a proposal to create a regulator for the aviation and rail traffic business as well and many more may follow.
Significance of regulatory bodies
- These bodies played a constructive role in ensuring the free and fair market.
- They help to implement standards and safety, or to oversee use of public goods and regulate business.
- Some regulatory bodiesgrant licenses to those interested in export business.
- Some independent regulatory agencies perform investigations or audits, and some are authorised to fine the important parties and order certain measures.
- It also regulates collection and circulation of credit information.
- They played a significant role in setting the policy agenda, outline regulations, punish non-compliance and garner resources to manage their affairs.
For example
- Steps taken by Reserve Bank of India (RBI) in tackling the liquidity crisis and management of increasing Non- Performing Assets (NPAs) is a good move in this pandemic
- SEBI has also been instrumental in taking quick and effective steps in light of the global meltdown and the Satyam fiasco.
Improper regulation or failure of regulatory bodies in smoothening the interaction between markets and the State may lead to a new crisis. For example, AGR issue. In sporadic cases, we find their failure in achieving the desired objectives- but their causes range from corrupt individuals & political interference to infrastructural & procedural bottlenecks. All these maladies necessitate the steps to ensure their independence and autonomy- both functional and financial.