The standout regulator controversy was the turf war between the Insurance Regulatory and Development Authority and the Securities and Exchange Board of India over the unit-linked insurance plans, the popular hybrid mutual-fund-cum-insurance products, writes Kanika Datta.
The year 2010 may go down as the year of the scams but it was also a significant year for sector regulators.
Several found their powers challenged or at least redefined -- insurance, stock market, and telecom -- and plans for a new 'autonomous' regulator -- for civil aviation -- were up in the air.
The standout regulator controversy was the turf war between the Insurance Regulatory and Development Authority and the Securities and Exchange Board of India over the unit-linked insurance plans, the popular hybrid mutual-fund-cum-insurance products.
It was a battle that was avidly followed as much for its significance as the personalities of J Harinarayan of Irda and C B Bhave of Sebi, both former bureaucrats.
In some ways, it also demonstrated the point that in India, the question of regulator 'autonomy' is ephemeral at best.
The controversy began in December 2009, when Sebi issued showcause notices to some insurers asking them why action should not be taken against them for selling Ulips without its permission.
The issue flared up after Sebi made an investor-friendly move by banning entry load fees for mutual-fund schemes.
Ulip sellers, however, continued to charge these fees, deeming themselves exempt from a Sebi diktat, since they came under Irda's jurisidiction.
The problem festered over February and March, with Irda issuing statements to the effect that Ulips were governed by insurance regulators globally, so there was no way they could come under Sebi.
Things came to a head on April 9 when Sebi banned 14 insurance companies from issuing or servicing Ulips.
Even as Finance Secretary Ashok Chawla asked the regulators to sort out the issue between each other, Harinarayan and Bhave started making urgent visits to Delhi [ Images ] to stake their claims.
In April, Sebi upped the ante by taking the issue to court although it issued a second order keeping existing Ulips outside its purview.
With the issue moving to the Supreme Court, it was the finance ministry's tune that had changed.
Statements issuing from North Block now talked of 'discussing the matter internally'.
By June, the question became moot after the government issued new rules stipulating that classified Ulips as part of the life insurance business, putting it squarely under Irda.
So, despite strenuous denials of a 'turf war', it can be said that Irda had won the lobbying game in North Block. But whether consumer interest had prevailed the core concern of any sector regulator -- is another point.
Something else came out of the wash.
The Union finance ministry set a cat among the pigeons by using the Sebi-Irda tussle to pass an ordinance increasing its own regulatory powers over the Reserve Bank of India [ Get Quote ].
A non-plussed and beleaguered RBI regained ground when former RBI governors cried foul and came to the central bank's support.
The soft spoken RBI Governor Duvvuri Subbarao voiced widely-shared fears about central bank autonomy and North Block backed off a bit, but not fully.
The RBI-FinMin saga is yet to fully play out.
The relationship between the Department of Telecommunications and the Telecom Regulatory Authority of India (Trai) has always been uneasy -- since Trai's inception, the two have argued over their powers and jurisdiction.
Trai's relative institutional weakness is evident in the current mega-telecom scandal that saw Communications Minister A Raja [ Images ] lose his job over allegations of corruption.
The controversy centred on the price at which licences for new 2G telecom operators were sold -- the Comptroller and Auditor General has put the losses at Rs 1,72,000 crore (Rs 1,720 billion) -- and the imposition of an arbitrary cut-off date for the applications to be submitted, a move that excluded many aspirants and favoured some.
Raja said on the price issue, he was following Trai's recommendations.
But a former Trai chief claims Raja largely ignored Trai's recommendations and though the regulator did not recommend auctions, but it did suggest that the price needed to be market-linked.
Meanwhile, nothing much has come of Trai's recommendation that DoT should scrap 70 licences of five new 2G players for violating the time-table for rolling out services.
If the 2G controversy is raging at the rarefied level of political rivalries and corporate lobbying, a controversy is brewing that directly impacts consumers: The issue of unsolicited marketing calls. Under the Telecom Unsolicited Commercial Call Regulation, 2007, telemarketing firms have to register with DoT.
But, on December 1, Trai issued regulations making itself the sole authority for registration.
This would apply to those telemarketers that had earlier registered themselves with DoT. Trai says it did this because the existing regulations had not stopped unsolicited calls.
And, internal DoT note questions Trai's powers to do this. And, the pesky calls and messages continue.
Meanwhile, with the Air India [ Images ] crash in Mangalore and airfares soaring, Civil Aviation Minister Praful Patel [ Images ] says he intends to fast-track the move for an 'autonomous' regulator -- The Civil Aviation Authority, expected to take decisions more quickly than the government's Directorate General of Civil Aviation.
He's looking at a timeframe of 18 to 24 months that will also entail overhauling civil aviation laws.
This is a sorely-needed development -- but whether CAA will be any more autonomous than the other sector regulators is worth watching.