Millennium Post

‘Don’t put Indian economy at mercy of Appellate Raj’

The comments assume significance in the wake of the high-profile Financial Sector Legislative Reforms Commission (FSLRC) having suggested creating a single appellate authority for all financial sector watchdogs, including the RBI.

The proposal, which was aimed at providing checks and balances for decisions made by the regulators, has been hanging fire for a long time due to opposition from various quarters, including the RBI.

“We need checks and balance, but we should ensure a balance of checks. We cannot have escaped the License Permit Raj only to end up in the Appellate Raj!,” Rajan said at an event here.

While he did not make any direct reference to the FSLRC or its suggestions, the RBI governor said: “If we create a multiple appellate process agianst government or regulatory action that is slow and undiscsriminting, we contain government access but also risk halting necessary government actions.
“If the government or regulator is less effective in preparing its case than private parties, we ensure that the appellate process largely biases justice towards those who have the resources to use it, rather than rectifying the miscarriage of justice,” he said.

Observing that the democratic accountability is very strong in India, he said “We may have a long way to go ... (as far as) the capacity of the government, by this I mean regulators like RBI also, to deliver governance and public services”. Rajan further said that in thinking of reforms the country needs to move from theoretical idea of how a system might work in a country with enormous administrative capacity to how it will work in actual Indian situation.

India, Rajan said, needed to choose “a happy medium between giving the administration unchecked power and creating complete paralysis”. The economic inclusion, he said, should mean easing access to quality education, nutrition, healthcare, finance and markets to all citizens for ensuring
sustainable growth.
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