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| Time to come clean | | Mr Abraham deserves a hearing and an explanation |
| Business Standard / New Delhi Sep 02, 2011, 00:40 IST |
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The charge of government interference in the functioning of the Securities and Exchange Board of India made by its former member K M Abraham is serious and he deserves a fairer hearing from the powers that be in New Delhi than has been the case so far. To paint him as a disgruntled and corrupt element, because he was denied an extension of term and had invested in an apartment in Mumbai built by someone who had business dealings with the National Stock Exchange, as the Union finance ministry has done, is both unfair and unconvincing. It is shocking that when Mr Abraham approached the then Union Cabinet secretary and the principal secretary to the prime minister for help, the correct thing to do by a member of the Indian Administrative Service, he was asked to beseech the very person against whom he was complaining, namely Omita Paul, advisor to Union Finance Minister Pranab Mukherjee. Whatever the facts of the case, and both the charges and counter-charges require further investigation and clarification on the part of the government, the unseemly spat between the capital market regulator and the Union finance ministry was uncalled for and was a highly retrograde development. At a time when there is so much public concern about good governance and transparency in government functioning, and worries are being expressed about the independence of regulators and autonomous organisations, this kind of interference and attack is regrettable.
If the charges levelled against Mr Abraham by the finance ministry through a press release earlier this week are true, then the ministry itself owes an explanation as to what action it took before Mr Abraham went public with his criticism. The entire episode raises two important questions about public policy and the functioning of the finance ministry. First, there is the larger issue of whether appointments of regulators and heads of autonomous institutions should be made on the basis of a “three plus two” principle, under which an initial appointment for three years is followed by an extension of two years. Former finance minister Jaswant Singh did the right thing when he discontinued this principle in the case of the Reserve Bank of India Governor and gave Y V Reddy a full five-year term. If governments are uncomfortable granting a five-year term to one person, then the appointment should be made for a fixed period of only three years. To use the “three plus two” principle as a way of keeping regulators on a short leash and rewarding them for “good behaviour” with an additional two years is not a healthy practice. Second, l’affaire Abraham once again draws attention to the role and functions of an “advisor” in the finance ministry. Mr Mukherjee would do well to clarify the role of an advisor and her administrative jurisdiction in dealing with officials of the ministry, of agencies under the ministry and regulatory institutions. In the absence of such a clarification, vested interests could make a mountain out of a molehill. The finance ministry is a key instrument of central government policy and functioning. If the ministry adopts good governance practices, it would inspire the rest of the government to emulate it.
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