Reforming the Regulatory State

The rise of regulators to share governance with Government is now a hard reality and governance through regulators probably constitutes the most important governance reforms in the last century. A regulator sits in the middle of a hierarchy of agencies: Government and economic agents. It generally does not share the ‘social’ obligations of Government; nor is it subject to the pressures of ‘interest’ groups. It provides the same level playing field to all kinds of participants without fear or favour. It builds the expertise matching the complexities of the task and evolves processes to enforce authority rapidly and proactively. It operates at arm’s length from government, insulated from daily political pressures and embedding their decisions in technical expertise. But there are significant concerns due to the fusion of legislative, executive, and judicial powers in one entity; Governments continue to remain accountable for the governance carried out through the regulator, thereby posing an example of the classical principal-agent problem. India has now more than two decades of experience with governance through regulators, It has been increasingly felt that a comprehensive review of the experience so far with a view to learn to improve the spacing and design of the regulators within the constitutional schema to make them more effective is the need of the hour. This paper undertakes this review on the basis of which it attempts to propose a more effective regulatory framework.