Independent Regulation is Essential for Economic Growth – Ashok Chawla

“Independent regulation, shorn of government interference, has always been important in reconciling consumer and producer interests; its importance has been enhanced with the growing prominence of the private sector in the Indian economy and also there is the need to avoid regulatory overlap and confusion, given the emergence of large number of regulators in the country.”

These were the words of Mr. Ashok Chawla, Chairman, Competition Commission of India at a Panel Discussion on ‘The Political Economy of Regulation in India: Impact on Investments and Economic Growth”, organised by CUTS International and CUTS Institute for Regulation & Competition (CIRC).

This discussion marked the release of CUTS and CIRC report by Mr. Chawla titled, ‘Competition and Regulation in India, 2011’ supported by the Royal Norwegian Embassy, New Delhi. The first report in the series of biennial reports on Competition and Regulation in India was released in 2007 while the second report was released in 2009.

In the opening session of this discussion, Mr. Pradeep S. Mehta, Secretary General, CUTS International presented the highlights of the mentioned report elaborating on the need to analyse the importance and effectiveness of regulatory institutions/processes, awareness among consumers and other stakeholder groups in all the studied sectors – Micro Finance Institutions, Natural Gas, Real Estate Sector, Retail Distribution, Passenger Road Transport and Telecommunications apart from cross-sectoral issues such as Political Economy of Regulation and Essential Facilities Doctrine.

Mr Mehta stressed on the need to improve the regulatory climate in India, while stressing on the importance of the regulators maintaining an arm’s length from the line ministries, of truly empowering them and on paying them salaries which reflected the truly important responsibilities they were entrusted with.

The opening session and subsequent release of the mentioned report was followed by a lively panel discussion moderated by Mr Mehta in which the panellists spanned the entire spectrum of relevant experts.

Dhanendra Kumar, former Chairman, Competition Commission of India mentioned that there is a need for a regulator in the sector given the dynamics but the question to be debated is how much regulation and what type of regulation? Even though competition is the best regulator but you still need somebody to regulate competition, he emphasised.

Thus, there is a need to build human capital for dealing with regulatory issues as well as generate awareness among the common man regarding the benefits of competition and regulation. He congratulated CUTS and CIRC for taking path breaking initiatives in these field and making appropriate policy recommendations.

Ashok Lavasa, Addl Secretary, Ministry of Power, felt that regulators were created as a result of demands by the polity because of inherent contradictions in the tasks of governance and regulation. Expressing his views regarding the need for a coal regulator, he mentioned that there is no need for a regulator, if we are able to break the monopoly of one supplier of coal in the country. Till such a time is not arrived, one would need a regulator in the coal sector to ensure avoidance of abuse of monopoly powers.

Reacting to the point for establishment of regulators for cognate sectors, he mentioned that the Electricity Act, 2003 did authorise creation of regional regulators rather than state regulators, but it was not successful due to absence of political will.

Pronab Sen, Country Director, International Growth Centre stressed on importance of mapping of social objectives while establishing regulators in the country and that the regulatory regime should be adopted given the socio-political situation in India. Reacting to the point regarding independence and accountability of sector regulators, he mentioned that it is important to understand system of governance in which the regulators function, so as to determine to whom the regulators should be accountable to and from whom should they be independent.

Rajat Kathuria, Director and Chief Executive, ICRIER, after congratulating CUTS for the report, stressed the importance of undertaking sound research to map empirical evidence regarding the impact of regulatory decisions in terms of costs and benefits on the consumers and the economy. Such studies have not been undertaken in India so far. Mehta suggested using tools such as Regulatory Impact Assessment (RIA), as it has also been suggested by the Working Group on Cross Cutting Issues-Business Regulatory Frame work constituted by the Planning Commission of India in the context of preparation of the 12th plan.

A rich interaction among the panellists and the participants followed. Not only did this occasion mark the release of an important report but it also emphasised the significance of independent and appropriate regulations for the future economic development of the country

For further information please contact:

Mr. Kamal Sharma, Director, CIRC (; +91 8826887788)
Udai S Mehta, Associate Director, CUTS (; +91 98292 85926)