CAG Report on Regulatory Bodies

CAG Report on FSSAI

  • Regulatory and Administration Work: FSSAI entrusted the task of suggesting revision of standard to representatives of food business operators whose opinions may be biased.
  • Licensing and Enforcement: License has been issued based on incomplete documents in more than 50 % of the cases.
  • Status of Food Lab: 65 out of 72 State Food Lab don’t possess NBL accreditation and there is a shortage of testing equipment.
  • The case of “Yogi” and NSE Managing Director Ms Chitra is the point highlighting lapse in Corporate Governance and Failure of Regulatory Insight.
    • Ms Chitra was sending confidential report about the market to spiritual Guru {Himalayan Yogi}.
    • Ms.Chitra appointed an individual, Anand Subramanian, first as chief strategic adviser and, next, as group operating officer without following due process. Report of EY says Anand is Yogi but Ms Chitra and SEBI says there is third person who is yogi and who is faceless yet.
    • According to the SEBI report, an ‘outsider’ regularly advised Chitra over emails, on a range of issues relating to roles of NSE senior officials, organisational structure, and possible lobbying strategies.

Issues highlighted in SEBI as a regulator.

  • Nepotism in appointment.
  • Board was aware of irregularities but kept silent.
  • Public Interest Directors (PIDs) failed to keep SEBI informed about the goings-on at the NSE.
  • Focus on performance and keeping aside other traits of Good corporate governance.

What should be done by Regulator in such case:

  1. Bring in diversity in the selection of board members: The top management must be allowed to choose not more than 50% of the independent directors. The rest must be chosen by various other stakeholders — financial institutions, banks, small shareholders, employees, etc.
  2. Penalise the Directors: Regulators must penalise directors through a whole range of instruments — financial penalties, removal from boards and a permanent ban from board membership.
  3. Regulate the regulators: Periodic independent audits of all regulators by a panel of eminent persons. The audits must evaluate the regulators’ performance in relation to their objectives.

Working of Competition Commission of India(CCI):

Competition commission of India as a regulatory Body has raised important question.

  1. CCI is looking into allegations against Google: That the tech giant requires original equipment manufacturers in the smartphone and smart TV space to sign agreements which prevent such manufacturers from making forked versions of Android operating system.
  2. Differential treatment in terms of commissions charged to sellers were also a cause of concern. The National Restaurants Association of India has approached the CCI, alleging Swiggy and Zomato have misused their market power by unilaterally raising commissions charged to restaurants and masking consumer data from restaurants.
  3. The ecosystem of exclusive agreements, deep discounting, and preferred sellers put together by online platforms commanding market power are also raising competition concerns.
  4. Antitrust concerns with Apple:
    • App store: Competition regulators tend to take the view that the relevant market is “iOS apps,” and here Apple has a 100% monopoly on their sale and distribution.
    • Default App: Additionally, some companies accuse Apple of anti-competitive behaviour by giving its own apps advantages over third party ones.
    • Relationship with carriers and retailers: Apple was able to dictate terms. In South Korea, for example, it was accused of imposing three onerous conditions on local carriers: a) Carriers had to buy minimum quantities of each model, dictated by Apple. b) Carriers had to share the cost of warranty repairs or replacements. c) Carriers had to pay to run Apple’s own TV ads for the iPhone.
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