The new lords of misrule

January 06, 2010

Last fortnight, we began discussing ‘authorities’, and asked: Is this variant of governance reform working? This time, let’s consider the Food Safety and Standards Authority (fssa). It was created because of a recommendation of the Joint Parliamentary Committee which investigated our report on pesticide content in soft drinks and the lack of standards to regulate contamination in food. The concern was the existing structure, based on a committee within the Union ministry of health and family welfare, was inadequate to the challenge of the modern food industry, which is taking over our kitchens.

We needed a regulator that erred on the side of public health, to ensure the food on our table met strict standards for toxins, additives and chemicals and enable nutrition, not commerce, to drive the food industry. Food science has changed, so has the business. In this scenario, regulation had to move away from adulteration-checking inspectors to knowledge-based decisions on the best standards for food.

But sadly, the fssa is increasingly compromised. From the few steps it has taken—its track-record is abysmal—it seems to be not a consumer-friendly but an industry-friendly food regulator. A proof is the March 2009 draft regulation on food recall procedure, necessary for incidents like melamine in milk (China) or dioxin in beverages (Europe) or worms in chocolate (India). The draft regulation says it could maintain “confidentiality of commercially sensitive information and could delay public notification of food recall if it will cause panic among consumers”. This is for corporates, not public health.

It was no surprise, then, to learn—as we did through media reports—the committees of the fssa which take ‘scientific’ decisions are stacked high with food industry representatives, officials from beverage and fast-food giants like Pepsico, Coca Cola and Nestle. It is evident corporate regulatory capture is possible, indeed easy, in this form of institutional management.

The reason’s not hard to find. First, fssa, and other authorities, are created to be independent. But little is done to make them accountable to this objective. The ‘authority’, in nine cases out of ten, is headed by retired, out-of-commission bureaucrats, for these individuals have regulatory experience. But in the new role they are not bound by the government’s established administrative, reporting and personnel systems. Instead, by law, they report to a faceless Parliament. No specific parliamentary sub-committee exists to manage and oversee the work of a newly created authority. Regulatory capture becomes effortless for powerful interests in the petroleum, food or any sector. What happens, then, is decisions get murkier, undermining all credibility, making the ‘authority’ even less functional or effective. The experience of the Petroleum and Natural Gas Regulatory Board should teach us a lesson or two.

Second, an ‘authority’ is created without fixing the underlying problems of sectoral expertise and the need for integration with existing institutional capacity. In other words, no attention is paid to the serious details of institutional reform. In fssa’s case, the expertise of standard-setting lies with the Bureau of Indian Standards, but that’s under a different ministry—Consumer Affairs. No real effort’s been made to re-engineer institutional capacity. No clear roles defined. Instead, one more agency’s joined the rigmarole of governance.

The situation is the same with environmental impact assessment (eia) authorities, created in each state to scrutinize and sanction industrial projects. Till a few years ago, all projects came to the Centre for clearance, leading to delays and seemingly poor decision-making. It was believed decisions devolve to the state level, where environmental impacts are more evident. Assessment would be easier. But all this was done without thinking through the institutional design, and all it has ended up doing is to decentralize the ‘transaction cost’. eia decisions are not being taken for the environment. Indeed, regulatory capacity is seriously missing in the area of environment.

My colleagues recently evaluated the working of state pollution control boards and found, to their horror, nobody’s made the institutions functional. They lack funds, personnel and capacity to ensure enforcement and compliance. In most cases, they are toothless bodies, made dysfunctional via neglect. The challenge should be to build internal capacity. But internal reform is difficult. So the government’s taken the easy way: bypass, and just create new institutions. For instance, the state eia authorities have been set up as committees, headed by former bureaucrats or similarly experienced individuals, but without internal capacity to evaluate projects and no clarity on the interface with existing pollution regulators. These bodies meet, clear projects and go away. Somebody is ‘responsible’ for assessment and somebody else is ‘responsible’ for monitoring future impacts. So how can we have effective decision-making?

The current institutional ‘design’ is not for public purpose. It needs review, fast. Could we have institutions that can tackle future challenges?

—Sunita Narain