The growing consensus within the government now is to confer on the high-level committee on capital markets the status of a regulator. The only difference will be that with the status of a regulator, the committee will have a permanent secretariat.

At present, the committee is chaired by the governor of the Reserve Bank of India and has representation from the finance ministry, the Securities and Exchange Board of India and the Insurance Regulatory Development Authority.

The official justification for the move is the need for a permanent body that could take an overall view of issues and developments affecting the financial markets.

Such a need had been voiced by several committees including the joint parliamentary committee that probed the stock markets scam two years ago. So it may not be a super-regulator, but government officials admit that, willy-nilly, it will lead to the birth of one more regulator.

As finance minister in the P V Narasimha Rao government in the nineties, Manmohan Singh was fond of saying that the Indian economy was under-governed and over-regulated. He was talking about the plethora of rules and regulations that made governance difficult.

Today, many of those rules and regulations have been changed. With economic liberalisation has come the need for regulatory authorities for different industries.

The capital market and the insurance industry, which used to be controlled by the finance ministry, have now been liberalised and are now regulated by the Sebi and the IRDA. The communications ministry has now given way to the Telecom Regulatory Authority of India as regulator for the telecom industry.

The power sector did not have one body to look after it. There was the power ministry at the Centre, which would decide on the allocation of resources for new power plants. The Central Electricity Authority used to be the apex authority for giving techno-economic clearances for power projects.

Now the Central Electricity Regulatory Commission has become the central regulator for the power sector. The power ministry is only concerned with framing the overall power policy and CEA functions as a technical advisor to CERC.

Apart from the proposal to make the high-level capital markets committee into a regulator, there are many other plans to set up new regulatory bodies. The RBI, the earliest regulatory body for banks and financial institutions, is now under pressure to give up its control on non-banking finance companies.

There is a view that the RBI should facilitate the creation of a separate body that could regulate the efficient functioning of non-bank finance companies. A decision has already been taken to set up a pension funds regulator now that the government has liberalized their functioning.

While the creation of new regulatory bodies for different industries is welcome, what has caused some concern among bureaucrats is the manner in which the administrative ministries are still trying to retain some control over the regulatory bodies.

That the bureaucrats are concerned is indicative of the deep interest they have in the functioning of the regulatory bodies.

The fact is that senior bureaucrats have begun treating the chairmanship of a regulatory body after their retirement as a reasonable reward for good deeds they might have done while in service at the behest of their political bosses. Thus, most regulators today are retired bureaucrats. Which is why senior bureaucrats are worried about the independence given to these regulatory bodies.

They have another grievance. The pay and perquisites of those who head these regulatory bodies are not attractive. Thus, most of the retired bureaucrats after assuming charge as the head of a regulatory body find that, even after exiting government, the same curse of a modest salary haunts them.

If the government does not retain some control over the regulatory bodies, the bureaucrats will hardly stand a chance to head them after retirement. And if the pay and perquisites of the heads of regulatory bodies are made attractive, the retired bureaucrats might suddenly find that they have been edged out of the race for these jobs.

Indeed, a couple of experts from the private sector were considered to head some of these regulatory bodies. One of them had even been shortlisted. But the exercise fell through because the private sector expert considered the regulator's salary a pittance.

So if the government wants to retain some say in the running of the regulatory bodies, they must continue to nominate the chosen few among the senior bureaucrats.

Similarly, the pay and perks of the heads of the regulatory bodies too need to remain "unattractive" at least for private sector professionals.