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Journalism of Courage
Finance Minister Arun Jaitley has cherry picked recommendations of the Financial Sector Legislative Reforms Commission which are doable and left tougher ones to be taken up later, perhaps when there is a greater consensus.
The proposed merger of the Forward Markets Commission (FMC) with Sebi was recommended by the Justice Srikrishna committee. This won’t be difficult to carry through as the FMC is not statutorily empowered. Considering that the products regulated by the two aren’t drastically different, policy makers have argued for years that a convergence would help.
In fact, during the UPA-I regime, then finance minister P Chidambaram had announced a convergence but could not take it forward after resistance from Sharad Pawar, then the agriculture minister. Opposition to this weakened after the NSEL scam two years ago, with many pointing out the shortcomings of a market with a regulator lacking teeth.
The Public Debt Management Agency has also been in the making for a long time. The agency will handle the government’s borrrowings — internal,external and investments — a job currently done by the RBI. This was originally recommended by the RBI during Bimal Jalan’s tenure as governor but was opposed by the central bank which had claimed that with such a high fiscal deficit, a move such as that would impact monetary policy management.
Work on a few other recommendations of the FSLRC will also kick off. This will include the setting up of a Financial Redressal Agency (FRA) which will address all investor complaints across the financial sector. The Indian Financial Code or IFC is the most difficult piece in the proposed new regulatory architecture and is a little way away. The government will now await Justice Srikrishna’s views on the proposed new law — an assignment which he is working on now.
