Why should bureaucrats, judges be regulators?

Regulators should have a thorough knowledge of the sector they regulate and a vision for its future, and these qualities are not necessarily present in the civil service or the judiciary. However, a count of the chairpersons of the fourteen State Electricity Regulatory Commissions and the three Central Regulatory Commissions shows that 41 percent are retired bureaucrats, 23 percent retired judges, and 23 percent professionals; 13 percent of the posts are vacant. Interestingly, the post of chairman of the CERC has been vacant since February, and there are no takers. OERC has been without a regular chairman for over a year as the selection is mired in litigation. While there is no doubt that the present chairpersons have competence, the fact remains that a majority of them had no prior experience of the sector they regulate or a knowledge of the issues involved. Is there a dearth of qualified professionals? Or is it that there a lacuna in the regulatory legislation or in the selection procedure? Qualifications for selecting the members of a regulatory authority have been laid down in the legislation, which, depending on the sector, include sufficient experience in engineering, economics, commerce, finance, law, administration, industry, or consumer affairs; they do not call for any specific experience of the sector. In the telecom and port sector, the law requires the chairperson of TAMP to have held a secretary's rank in the government, and the members of the TRAI to have held at least the positions of additional secretary or equivalent in the government of India for a period of three years. Thus, the law prevents outsiders to manning these posts. Some of the state legislation specifically states that the chairperson should be from the judiciary. Thus, the legislation leans towards the civil service and judiciary, and gives no weightage to sector experience. Similarly, the provisions relating to disqualification also act as disincentives to professionals aspiring to become regulators. Commercial employment in the relevant industry is prohibited in India once a regulator completes his tenure. Why should then a professional in mid-career want to become a regulator if after 5 years he cannot go back to his industry? In contrast, in US, there are no restrictions on energy regulators getting employed in energy law practice, regulated utilities, energy trade associations, etc, so long as they do not practice before the regulatory commission where they had served as members. In fact, the US industry is keen to hire former regulators to help understand regulatory policies, and comply with regulations more effectively. The selection process of Indian regulators is also faulty and biased. Selection committees, even where they exist, are packed with civil servants and are chaired by civil servants or judges. Typically, the selection committee writes to various institutions/experts asking for nominations. The nominations are then screened for shortlisting of two candidates for each post for the consideration of the government. The drawbacks in such a procedure are: The choice of the institutions/experts who are asked to suggest candidates could be restricted according to the bias of the committee on its secretariat. The institutions/experts would tend to limit their search to their circle of associates and friends. They many not have the time and interventions to make a constructive response. There is no reason why the posts should not be widely advertised as is done in Argentina. Regulatory legislation in India provides for a maximum tenure, usually five years, and provide for an age limit beyond which a regulator cannot serve, which is usually 65. The law does not, however, require that a regulator should have a minimum tenure of 4 or even 3 years. As a result, regulators are appointed when they are past 60 and do not serve long enough to understand the sector and make a meaningful contribution to its development. There have even been instances where regulators have demitted office without completing even one year. Under the Indian regulatory legislation, reappointment of retiring regulators is prohibited in the electricity sector, while the legislation is silent in the case of the telecom and port sectors. The position is different in other countries. In Argentina and Israel, for example, the regulators are eligible for re-appointment. In a country like India where there is dearth of regulatory expertise, re-appointment through a selection process along with the other candidates could make it possible to access and retain expertise. The quality of regulation will improve only if the regulators represent the best available latent. And this can happen only if the law provides for it, and the selection is made by a broad based selection committee through a transparent process. Independent regulation is a new form of governance, and unless those who governs under this new form are competent to do so, we would only be jumping from the frying pan to the fire. Let us remember what Landis, an eminent US regulator said "Good men made poor laws workable; poor men will wreck havoc with good laws."