Need to make regulation more independent and proactive, say Parliamentarians

New Delhi, March 31, 2008

Speaking at a Panel Discussion of Parliamentarians on the “Political Economy of Regulation in India – What do we need to do” organized by CUTS Institute for Regulation and Competition (CIRC) here on 31st March, noted Parliamentarian Shri Suresh Prabhu, Member, Lok Sabha opined that there is a need to redefine political economy of regulation to include the vital role that bureaucrats play in it. He also stressed that the independence of the regulators is the most important thing determining the quality of regulation. Further, the higher the level at which regulation is carried out, the better it is.

Earlier Nitin Desai, Chairman, Managing Committee, CIRC welcomed all the panelists and invited Pradeep S Mehta to the dais to make the inaugural address. In a short crisp speech Mr Mehta expressed some of his views on how the regulatory climate could be improved in India stressing on the importance of the regulators maintaining an arm’s length from the line ministries, of truly empowering them and on paying them salaries which reflected the truly important responsibilities they were entrusted with.

Creon Butler, Deputy High Commissioner, British High Commission, reflected on how the long British experience in regulation could be useful for the evolving Indian regulatory framework. He stressed on the importance of providing the necessary flexibility in the regulatory domain. He also said that India might be well advised to look beyond the same set of civil servants for its regulators. Last, he empasised the reactive nature of regulation and the need to put a regulatory framework swiftly in place once a new need surfaced.

Other noted Parliamentarians also spoke at the meet. Shri Sharad Joshi, Member, Rajya Sabha said that in our legislations we need to stress more on the objective of regulations rather than the structure, salaries and perks of the appointees that constitute the regulatory bodies. He felt that regulation was a truly difficult task; though individuals were good at assessing their own needs, they were often unable to assess the needs of a heterogeneous group. Shri Santosh Bagrodia, Member, Rajya Sabha had a unique perspective on regulation stressing that good education was a prerequisite for successful regulation. Dr. Vallabhbhai Kathiriya, Member, Lok Sabha carried this emphasis on social needs a bit further by stressing that regulation should cater to the holistic needs of society.

Interestingly, many of the views mirrored by the discussion today are also reflected in a study by CUTS International titled “Competition and regulation in India – A Status Report 2007”. This stresses the fact that contrary to what popular opinion might perceive the disconnect between the thinking of Parliamentarians and progressive civil society organizations like CUTS might be more illusory than real. Such interaction thus raises hopes for the future of building a consensus among the politicians and civil society on the need and path of regulatory reform.

For More information please contact:
Pradeep S. Mehta, psm@cuts.org 09829013131
Vibhor Bansal, vb2@cuts.org 9910594035

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Phasing Out ADC Will Benefit Telecom Consumers: CUTS

New Delhi, March 30, 2008

CUTS International has backed TRAI’s recommendation on the phasing out of Access Deficit Charges (ADC) issue.

In a press release issued here today, CUTS Secretary General, Pradeep S Mehta, said that this move, apart from benefiting consumers, will help in creating a level playing field for service operators.

“In any event, it was incongruous and a tax on consumers as a double whammy i.e the existence of both ADC and USO tax. We agree with the TRAI’s view that in the light of high growth in the subscriber base and reasonable degree of competition among the private as well publicly owned operators, ADC should be phased out and merged with Universal Service Obligation Fund (USOF).” said Mehta.

CUTS has observed that as a result of support through ADC, BSNL was able to provide more access to telecom services in rural areas. But at the same time, the quality of service provided by BSNL was reported to be very poor. Consumers have suffered very much from the abuses resulting from the monopoly power exercised by BSNL.

Addressing the TRAI’s concern on extending service to rural areas, it has suggested to the authority to make it mandatory for all operators to ensure 100% coverage of the license area including remote areas. Since, a licence is issued for the whole circle/zone, it is justified to ask them to ensure full coverage. It will enhance the teledensity, which is currently at an abysmal level of 7 percent in rural areas. The USO fund is also available for subsidizing high cost-low returns investments.

“When the networks of all operators are available in remote areas, it will provide a choice to consumer to select a service provider. At the same time, operators will also find it profitable to increase their subscriber base in rural areas to exploit the market and recover the capital cost. As a result of competition, the tariff will come down and benefit the consumers in rural areas.” Mehta added.

CUTS has also pointed out that the gains resulting from abolition of ADC should be shared with consumers justly. Otherwise, CUTS will not hesitate in taking legal action.

For further information please contact:

Rajesh Kumar, rk2@cuts.org +91 9887905287
Pradeep S Mehta, psm@cuts.org +91 9810206633/9829013131