Regulatory Management
and Reform in India
Siddhartha Mitra and Vijay Vir Singh
Regulation: Definitions
• Controlling human or societal behaviour
by rules
• Alternatively a rule or order issued by an
executive authority or regulatory agency
having the force of law
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Regulation: Theories
• ‘Public interest’ school
• Checks market failure, anti-competitive practices and promotes
public interest
• Augments stakeholder welfare
• ‘Capture’ school
• Net outcome of powerful vested interests
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Applicability of the two theories would depend on
• Strength of institutions
• Spread of power across interest groups
• Both schools are relevant for Indian experience
• Multiplicity of lobbies and heterogeneous stakeholder community
• Increasing private presence and co-existence with public firms
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Typology of Regulation in India
• One possible typology: economic
regulation, regulation in public interest,
environmental regulation
• Business regulation and sector regulation
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Changes in Business Regulation
• Industrial licensing requirements mostly eliminated
• Areas reserved for public sector opened to private sector
participation
• Tax rates rationalised and tax laws simplified
• Double tax avoidance agreement with various countries
• Incentives provided for new investments in infrastructure,
power distribution, industrial parks or special economic
zones (SEZ) etc
• Foreign exchange controls liberalised
• Liberalisation of approvals needed from state
governments but actual implementation dogged by
bureaucratic inefficiency
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Changes in Sector Regulation
• Private entry/participation in many sectors has led
to need for regulation to promote /simulate
competition
• Specialised regulatory agencies in telecom,
electricity etc have been established replacing
regulation by line ministries
• Establishment of specialised regulators has often
not resulted in the expected regulatory
independence
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Drivers of Regulatory Change
Who?
• Political leadership: relevant ministers and ministries, leaders
of opposition parties
• Planning Commission
• Chambers of commerce and civil society
Priorities for change
• Improvement in the quality of government-business interface
• Reduction in bureaucratisation
• Reduction in procedures and time required for starting a
business
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Important Regulatory Areas
Needing Intervention
• Delineation and better coordination between
regulation and policy
• Consultation with stakeholders
• Better coordination and cooperation between
competition authority and sector regulators
• Better regulation of product quality
• Improvements in redressal for consumers and
other stakeholders
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Important Regulatory Areas
Needing Intervention
• Inventorisation of licenses and regulations
• Better implementation of single window systems
• Regulatory coherence
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Common competition law binding all sectors of the
economy already exists and has to be enforced
Planning Commission’s approach paper for enhancement
of such coherence and standardisation of the operation of
sector regulators would need implementation
• Financial and administrative autonomy of regulators
• Enhancement of accountability of regulators
• Assessment of quality of regulation through methods such as
Regulatory Impact Analysis and Consumer Impact Assessment
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