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A Growing Union-State Power Imbalance due to rising role of Statutory Regulatory Authorities
Context:
The Indian Constitution ensures a structured federal framework by delineating powers through the Union List, State List, Concurrent List, and Schedules 11 and 12, which empower local governance.However Rising role of Statutory Regulatory Authorities (SRAs) are hampering this delicate balance of power between union and state governments.
Statutory Regulatory Authorities (SRAs): Definition and Need:
What are SRAs?:
- Statutory Regulatory Authorities (SRAs) are Union-level bodies empowered to create and enforce regulations in specialised domains.
- Established under skeletal laws, SRAs like the Securities and Exchange Board of India (SEBI) wield substantial authority to manage critical areas such as securities, banking, telecommunications, and environmental protection.
Need for SRAs:
- Specialised Governance: SRAs are designed to address the complexity of modern governance, requiring expertise beyond the capabilities of traditional legislative processes.
- Agility in Regulation: Rapidly evolving sectors such as finance and technology necessitate swift and flexible rule-making, which SRAs facilitate. For instance, SEBI’s 2020 portfolio management regulations underwent four amendments in three years to adapt to market needs.
- Global Competitiveness: SRAs align India’s regulatory framework with international standards, crucial for attracting investments and fostering innovation.
How SRAs Are Weakening Democracy:
Despite their utility, SRAs pose significant challenges to democratic principles and federal structures:
- Democratic Deficit
- Bypassing Legislative Oversight: SRAs issue binding regulations without detailed parliamentary scrutiny, undermining the role of elected representatives.
- Curtailing Rajya Sabha’s Role: Unlike regular laws that require approval from both the Lok Sabha and Rajya Sabha, SRA regulations bypass the Rajya Sabha’s deliberative function. For instance, from 1999 to 2022, only four regulations were reviewed by the Rajya Sabha’s Subordinate Legislation Committee, despite hundreds being issued.
- Unelected Officials: SRA regulations are crafted by bureaucrats or experts, lacking direct democratic legitimacy.
- Federal Deficit
- Impact on State Powers: SRAs encroach upon areas reserved for states under the Constitution. For example, SEBI’s regulation of municipal bonds affects Urban Local Bodies (ULBs), which fall under the State List.
- Curtailing Financing Powers of ULBs: ULBs require state government approval for borrowing. SEBI’s regulations impose additional Union-level oversight, diminishing state autonomy and local governance flexibility.
Erosion of Federal Balance by Union Regulators:
The rise of Statutory Regulatory Authorities (SRAs) at the Union level has disrupted this equilibrium:
- Quasi-Legislative Powers: SRAs like SEBI issue binding regulations under skeletal laws, often bypassing parliamentary scrutiny.
- Encroachment on State Domains: SEBI’s regulation of municipal bonds, a State List subject, limits state financial autonomy.
- Weak Oversight: SEBI has issued over 660 regulations since 1992, but parliamentary committees have reviewed only a few, undermining federal accountability.
- Parliamentary Bypass: The lack of comprehensive reviews of SRA regulations minimises state influence in Union-level decisions, disrupting the constitutional balance of power.
Solutions to Address the Deficits:
To restore democratic accountability and federal harmony, the following measures are essential:
- Restrict Expansive Powers: Limit SRAs’ authority to regulate areas traditionally requiring legislative oversight and ensure alignment with parliamentary laws.
- Strengthen Parliamentary Scrutiny: Empower standing committees to systematically review subordinate legislation and enhance Rajya Sabha’s role in regulatory oversight.
- Introduce Regional Representation: Establish frameworks for including state and regional voices in regulatory bodies, ensuring diverse perspectives in decision-making.
- Improve Transparency and Accountability: Adopt global best practices, such as public consultations and cost-benefit analyses, to enhance the legitimacy of regulations.
Recalibrate Federal Balance: Mandate consultations with state governments for regulations affecting state-level governance and ensure that Union-level regulations respect constitutional mandates.
