How to regulate the regulator?

The Food Safety and Standards Authority's track-record suggests it is industry-friendly, not pro-consumer, says Sunita Narain.

We are discussing a governance-reform initiative -- setting up of authorities that are created under law, reporting to Parliament --  to take effective, independent decisions. The question is: Is this variant working and if it's not, what are the options for the future? 

The Food Safety and Standards Authority is much like the Petroleum and Natural Gas Regulatory Board -- we discussed it a fortnight ago -- in terms of its structure but with a difference in what it is expected to regulate. It was created after the recommendation of the Joint Parliamentary Committee, which investigated our report on the pesticide content in soft drinks and the lack of standards to regulate contamination in food.

The concern was that the existing structure, based on a committee within the Union ministry of health and family planning, was inadequate to meet the challenges posed by the modern food industry, which is taking over our kitchens.  

We needed a regulator to err on the side of public health to ensure that food on our table met strict standards for levels of toxins, additives and chemicals and also to make sure that nutrition, not commerce drove the food industry.

It was also evident that even as food science was changing, business was also on a makeover. In this scenario, regulation needed to move away from inspectors who check adulteration to knowledge-based decisions on the best standards and methods to ensure food on our table did not compromise our health. 

But the sad fact is that the Food Safety and Standards Authority is itself increasingly compromised. From the few (and its track-record in terms of work is clearly abysmal) steps it has taken, it would seem it is not a consumer-friendly food regulator -- it is industry-friendly.

Take the March 2009 draft regulation on food-recall procedure -- necessary for incidents when melamine is found in milk (like China) or dioxin in beverages (like Europe) or worms in chocolates (like India).

The draft regulation says that the regulator could maintain 'confidentiality of commercially-sensitive information and could delay public notification of food recall if it will cause panic among consumers'.

Clearly, this is designed for corporate interests and not public health.

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

The reason is not hard to find. One, this and other similar authorities are supposed to be independent. But little is done to make them accountable to this objective. The authority, in nine out of ten cases, is headed by retired, out-of-commission bureaucrats, as these individuals have the requisite regulatory experience.

But in the new role, they are not bound by government's established administrative, reporting and personnel systems. Instead under the law, they report to a faceless parliament. No specific parliamentary sub-committee has been created to manage and oversee the work of any newly created authority. Regulatory capture is then easy and effortless for powerful interests in the petroleum, food or any other sector. 

In this way, decisions get more and more murky and the credibility of the institution is undermined, making it even less functional and less effective. The experience of the PNGRB should teach us a lesson or two.

Two, the authorities have been created without fixing the underlying problems of sectoral expertise and the need for integration with existing institutional capacity. In the case of the food authority, the expertise of standard-setting is in the Bureau of Indian Standards, which is under a different ministry -- Consumer Affairs. No real effort at re-engineering the institutional capacities has been made.

The case is similar with the environmental impact assessment authorities, created in each state, to scrutinise and sanction industrial projects. The problem is that regulatory capacity is seriously missing in the area of environment.

My colleagues have recently evaluated the working of state pollution control boards and found in most cases, they are toothless bodies, made dysfunctional because of neglect. The challenge is to build and strengthen internal capacity, not just to create new dysfunctional bodies.

But as the internal reform of institutions is difficult, the easy way is to bypass by creating new ones. For instance, the state environmental impact assessment 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 about their interface with existing pollution regulators.

Therefore, these bodies meet, clear projects, and go away. Somebody else is 'responsible' for assessment and somebody else is 'responsible' for monitoring the future impacts. In this case, how can we have effective decision-making?

It is clear we need future institutions to regulate future challenges. But this institutional 'design' is not for public purposes. It needs to be reviewed and fast.