Society needs Regulations. India needs Regulations, so, over the past 2-3 decades a new breed of organization has grown and spread its wings: Regulatory Authorities. Seemingly, to be expert, professional bodies with domain knowledge of the specific sector or subject they are “regulating”. These are set up by Government of India (though States also have some), aimed at taking the “Regulation” function out of Government and Ministries.
Regulators now exist for Banking, Capital Markets, Insurance, Pension Funds, Transport, Telecom, Pharma, Oil and Gas, Health, Safety, Food, Environment, Education, Advertising, Films and several other areas. And, framing Regulations is a complex process, involving wide-ranging consultations with consumers, producers and, of course, the Government which gives ultimate approval. Apart from the process being complex, Regulations themselves are complex and have a tendency to create unintended problems.
Regulations affect all – individuals, civil society, corporations, institutions committees and government itself (the Controller of Regulators). These are meant to impact all sections of society involved with the sector or issue governed by a Regulator. Regulations are designed to produce results and benefit but also impose constraints.
There are 7 issues which need consideration to build a Regulatory system which is on par with the best in the world and does India proud:
First, With the multiplicity of Regulatory Authorities, there is need for coordination, exchange of information, experiences and ideas. An Inter-Regulatory Authority Coordination Council needs to be set up for this purpose and, perhaps, most appropriately, chaired by the RBI Governor. Over a period of time, this Council will show beneficial results.
Second, Data and Technology are very important “aids” for a Regulatory Authority. The building of Data Bases would be very useful in ensuring efficient and professional handling of work. This will also enable Innovation in the work of Regulatory Authorities.
Third, A very important part of their work would be to make the public aware of the process and the different issues. Effective communication would be important to bring about transparency. This will help to move from a Mistrust based system to a Trust based system.
Fourth, It is important to provide the public both protection and service at reasonable cost and avoid unnecessary and avoidable regulations. Going forward, there will be pressure for more services at lower cost.
Fifth, By and large, the Chairs of the Regulatory Authorities are retired IAS officers, usually of the rank of Secretary in a Ministry at the time of retirement. They have extensive experience of Regulation because it is part and parcel of their work from the start of their careers. What maybe considered is a special effort to help them to become ‘Experts’ with deep domain knowledge.
Sixth, Regulatory Authorities have come to stay and are likely to play an increasing role in the future. The Technology Tsunami will impact the Sectors and the work of the Regulatory Authorities. Therefore, building up a Human Resources Cadre for Regulation work would be desirable. It will help make Regulation efficient and professional.
Seventh, And finally, side by side with Regulation, the Alternative Dispute Resolution process should be strengthened to minimize litigation and consequential delays. This will enable consensus building through negotiations.
2020 is turning out to be a very challenging year. The Regulatory Authorities have a part to play in, both, efficient Regulation as well as Ease of Living and Working. It would be a good time for them to start the Coordination process, the Innovation process, the Re-inventing Process and the Knowledge Development Process. Everyone will gain.