Tame exercise

The union cabinet’s decision to set up a coal regulator through an executive order is in accordance with a longstanding demand, but falls short of requirements and expectations. The government had wanted to set up a Coal Regulatory Authority of India (CRAI) as an independent regulatory body and had introduced a bill for this in the Lok Sabha. But the bill was stalled, as many others were, in the budget session and is bound to lapse now. The government’s decision to set up a regulator even with limited powers shows a sense of urgency, which should have been shown earlier. The idea seems to be that the body, being set up now, can be given legislative support by the new government after the elections and turned into a full-fledged authority. But what difference can a few months make, especially  when the regulator cannot do much in that period?

The regulator’s functions will include evolving the principles and methodology for price determination of coal and coal products, approval of mining plans and adjudication of disputes. But it will only be an advisory body and its decisions and actions in all these areas will not have any force, as it lacks statutory powers. Even the CRAI, as envisaged by the legislation, was considered to be less powerful and effective than regulators in some other sectors. The regulator by executive order cannot make an impact. Coal India is the monopoly player in the sector and it is not bound to heed the advice of an agency which has no effective power. It is also unlikely that any disputes will be successfully adjudicated by such a body. Regulatory bodies in other areas have penal powers to enforce their decisions and punish those who violate their directions. The coal regulator should also have them.

This is important because coal is perhaps the most strategic input for development and the sector is among the most corrupt and unregulated areas. More than half the country’s power output comes from coal and it will play a crucial role in future too. There are huge reserves but the country is an importer. Considering the importance of the sector a regulator with real powers should be appointed at the earliest. The existence of a lame regulator should not be an excuse not to have a real one in future.

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