Over the past two decades, DGCA, SEBI and IRDAI have all received significant expansions of statutory powers, but the accompanying accountability mechanisms have remained more or less the same. SEBI’s authority increased sharply after 2014, when it was granted search, seizure, disgorgement and strong recovery powers, and the 2015 merger of the Forward Markets Commission brought all commodity derivatives under its jurisdiction. IRDAI’s mandate widened in 2015, strengthening its licensing, inspection, consumer-protection and penalty powers. DGCA’s powers grew through the Aircraft (Amendment) Act 2020 and new aviation and drone rules, expanding its regulatory and enforcement reach over safety, airworthiness, drones and airline operations.
To balance these powers, the Government mainly continues to rely on parliamentary oversight, annual reporting requirements, and CAG audits (mostly financial audit and not performance audit). However, these checks remain mostly procedural and reactive rather than structural. There is no independent oversight board for regulators, no performance audits, and limited external evaluation of regulatory decisions and practically no vigilance culture. Accountability is largely dependent on courts, Parliament or the occasional committee.
A commonly cited Illustration of the widening gap between power and accountability is the Hindenburg–Adani episode. SEBI, despite its expanded enforcement machinery, faced public criticism over investigation timelines, disclosure practices and perceived opacity. Similar concerns appear in aviation disruptions and insurance grievance patterns, where regulators possess broad powers but are rarely questioned for systemic failures. The overall picture Is of regulators becoming more powerful in law, but not answerable in practice, creating a structural accountability deficit. Take for example -
Massive outage in IndiGo services. Did we see DGCA getting questioned? Issue of DGCA failure is being diverted to hint at lack of autonomy.
Millions of retail investors lost around ₹2 lakh crores in options trading amid rampant manipulation of stock indices. Nobody questioned the SEBI Chairperson or Board Members.
Insurance customers regularly get a raw deal from providers—even parliamentary committees have flagged this—yet nobody in IRDAI is ever held responsible.
This is what truly ails our regulatory landscape and not lack of autonomy or otherwise.
DGCA Watches the IndiGo Crisis Unfold
The IndiGo flight cancellations and nationwide disruption were not just an airline failure; they exposed a complete breakdown of regulatory oversight at the Directorate General of Civil Aviation (DGCA), a departmental regulator that lacks statutory autonomy. Chronic understaffing and a reactive culture were laid bare during the crisis. DGCA receives operational data from airlines—delays, crew utilisation, rostering stress, and maintenance capacity. These indicators would have been flashing warning signs of emerging strain for months, yet the regulator failed to detect or act on them. Predictive oversight was entirely absent; DGCA moved only after cancellations surged. The regulator had ample time to ensure IndiGo was ready for the revised Flight Duty Time Limitations (FDTL) norms. Instead, it accepted the airline’s assurances at face value without verifying crew availability, buffer strength, or roster resilience. When the new rules took effect, schedules collapsed, and DGCA was reduced to firefighting. DGCA’s supervision relies heavily on self-reported data from airlines, with little real-time audit or independent verification. This trust-based model crumbled under stress, as airlines naturally downplay operational weaknesses. A proactive regulator would have ordered schedule pruning and slot rationalisation at the first signs of trouble. DGCA waited until chaos erupted, revealing bureaucratic inertia and the absence of real-time crisis management. Despite clear Civil Aviation Requirements (CAR) on refunds, meals, accommodation, and passenger communication, thousands were left stranded, uninformed, and unsupported. DGCA neither deployed inspection teams nor enforced CAR obligations in real time. The enforcement vacuum was glaring. Global regulators activate crisis cells, deploy officers on the ground, and conduct hourly reviews, and communicate transparently. DGCA issued belated statements, offered no structured public updates, and displayed no visible leadership during the peak of the disruption. Penalties, when they finally came, were late and largely symbolic. DGCA is yet to question the failure of the Indigo Board. The IndiGo crisis revealed a regulator crippled by inadequate intent, insufficient capacity, and a weak institutional culture. DGCA’s failures were systemic, not incidental.
SEBI’s Failures in the Jane Street Matter
While DGCA has too little autonomy, SEBI represents the opposite extreme: a fully autonomous regulator armed with enormous powers yet plagued by delayed enforcement, opaque supervision, and negligible accountability. In the Jane Street case (currently under contest at SAT), SEBI reportedly had red flags, exchange alerts, and internal data for nearly two years. Retail investors lost huge sums to allegedly manipulated index movements while SEBI investigated in silence, issuing no public warnings. When action finally arrived—surprisingly not from the Surveillance department—it was too late for the millions of small investors already harmed. Soon afterwards, the firm was allowed to resume trading activities, reinforcing the perception that the intervention was merely symbolic. An autonomous regulator that acts without transparency or timely intervention is no better than a departmental regulator. SEBI’s lethargy in this case shows how autonomy without accountability can fail the constituency just as badly.
IRDAI’s Failure to Protect Health Insurance Consumers
The health insurance sector touches millions of ordinary households. IRDAI’s recent push for faster cashless claim authorisation (the 3-hour discharge rule) creates good headlines but sidesteps the core issue: the persistent lack of transparency in billing and claim decisions. Policyholders rarely receive clear breakdowns of what was approved, what was rejected, and why. Insurers provide minimal explanation of policy coverage, leaving customers in the dark. The new discharge timeline improves optics without tackling the deeper structural problem: consumers still cannot understand or effectively contest billing and claim decisions. Hospitals and insurers retain an overwhelming information advantage, while the regulator prioritises “efficiency” over fairness and transparency. This is not a technical shortcoming; it is a regulatory surrender to industry interests. IRDAI’s reluctance to mandate transparent billing and genuine insurer accountability reveals a clear pattern of capitulation.
Verdict: Regulators of All Types Are Shortchanging the Indian Public
DGCA lacks autonomy and capacity and it fails.
SEBI fails despite having abundant autonomy and sweeping powers.
IRDAI, again autonomous, fails by issuing cosmetic rules while ignoring structural consumer harm.
The common thread is the near-total absence of accountability across the regulatory system. When regulators fail, almost no one is held responsible. India’s regulators—departmental or statutory autonomous —have built systems where the public remains unprotected, grievances pile up, enforcement is perpetually delayed, and transparency is minimal. Airlines, market players, and insurers exploit these gaps with impunity, while regulators spring into action only after crises dominate headlines. The curse is not too much autonomy or too little. The real curse is the complete absence of accountability in every kind of regulator. India urgently needs a new regulatory culture: one where regulators themselves are regularly audited, internal vigilance is not practically dead, enforcement actions are transparent and timely, penalties carry real weight, and protection of public interest is the sole metric of success. Until accountability is enforced from the top, India will keep getting regulators that watch crises unfold instead of preventing them—and ordinary citizens will continue to pay the price. |
