The Need for Accountability in Regulatory Frameworks
The legal price of State failure: Accountability must bind all authorities
Business Standard
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Context
Regulatory frameworks govern the conduct of market participants and ensure compliance with laws. In India, the Securities and Exchange Board of India (Sebi) oversees stock exchanges and market infrastructure institutions (MIIs), but accountability for regulatory failures is unevenly distributed between state and private actors.
What The Author Says
The author argues that accountability mechanisms for state actors are insufficient compared to those for private entities, leading to systemic imbalances in regulatory frameworks.
Key Arguments
📗 Facts
- The National Stock Exchange of India Ltd is set to pay ₹1,800 crore to settle allegations from Sebi.
- Regulatory frameworks often impose clearer penalties on private entities compared to state actors.
- The Insolvency and Bankruptcy Code outlines that delays by adjudicatory bodies can negatively impact resolution outcomes.
📕 Opinions
- The current accountability mechanisms for state actors are inadequate and need reform.
- Transparency in reporting penalties can lead to more responsible governance.
Counterpoints
Financial penalties may not deter state actors effectively.
Imposing fines on government departments could merely shift public funds without improving accountability.
Systemic issues often cause regulatory failures, not individual misconduct.
Many failures stem from broader policy limitations rather than from the actions of specific individuals.
Excessive liability could stifle decision-making in public sectors.
Holding officials liable for every failure may lead to risk aversion, hindering effective governance.
Bias Assessment
The authors advocate for stronger accountability measures while acknowledging the complexities of state functions.
Why This Matters
Recent settlements, such as the ₹1,800 crore payment by the National Stock Exchange of India Ltd to Sebi, highlight ongoing regulatory failures and the need for improved accountability mechanisms.
🤔 Think About
- •How can we ensure accountability without discouraging effective governance?
- •What are the risks of imposing strict penalties on state actors?
- •Could transparency lead to better outcomes in regulatory compliance?
- •How do systemic issues complicate the accountability of public authorities?
Opens original article on Business Standard
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