Session #6: Sunday, 11 January, 10.00 - 11.45 (CSLG)
Panel coordinator(s): Navroz K. Dubash, Associate Professor, Centre for the Study of Law and Governance, JNU (ndubash@gmail.com)
Chair/discussant: Partha Mukhopadhyay, Senior Research Fellow at the Centre for Policy Research, New Delhi (pmukhopadhyay@gmail.com)
Panel description
Panelists, paper titles, and abstracts
In recent years, India has witnessed the emergence of a new site for governance: the "independent regulatory agency." These agencies are intended to bring a technocratic rationality to decision making, and have also often been created in the larger context of market-oriented reforms. While there has been much hand-wringing about the uneven performance of these agencies, the debate has left substantially unasked several larger questions about the rise and functioning of regulation: What explains the rise of independent regulation in India? How has regulation been inserted into political processes, and with what implications for constitutionally enshrined powers? How are these institutions to be held accountable and what is the source of their legitimacy? How do these regulators function in practice, with attention to both political context and prosaic concerns around knowledge and experience? The panel will explore these questions by drawing on both theoretical literature and specific case studies of regulatory agencies.
In an earlier work we had suggested (following Goldberg) that one way to approach regulation is to view the regulatory body as an administrator of a special category of contracts - contracts that simultaneously involve high degrees of asset specificity as well as acting to service a very large bodies of consumers, structures that standard contract law is ill-equipped to handle. Such 'administration' requires the regulatory body to process information which often has a legislative, executive as well as judicial component. It was argued that if the regulatory body were situated in an overall structure of governance that supports a strong separation of powers then an overall balance minimizing certain social costs of decision making could be maintained. However, if the doctrine of separation is exercised weakly then the constituent elements of the regulatory body may be over/under delegated potentially resulting in substantial social costs. We developed these arguments with reference to Indian Bankruptcy Regulation, the Competition Commission and the role of Central Banks. In this paper we aim to develop and nuance this argument further by investigating the structure of regulatory bodies that have been set up to regulate 'network' industries such as TELECOM and Electricity, as well as financial regulation pertaining to securities. In particular we pay heed to the nature of network effects that result in complementary nodes and links. This attempt is partially motivated by a desire to investigate the popular perception that while the TELECOM regulation (as well as the Securities regulation) is comparatively successful, electricity regulation is not. Using the evaluative criterion we constructed in our previous work we aim to evaluate the structuring of key ‘network’ industries in India.
This paper is concerned with two questions: first, is there a coherent body of regulation law in India. Secondly, if so, does regulation law promote a distinct mode of governance which may promote progressive and democratic reform in India. The paper will show that ‘regulation law’ is yet to emerge in the academic or judicial discourse as a discrete body of law. Further, I will argue that developing a coherent legal doctrine of regulation law and identifying its distinctive features as a mode of governance can result in increased opportunities for civic participation in governance and thereby promote progressive ends. In the last three decades several regulators have been set up in India, by enacting specific statutes which institute governors and govern their manner of working. These regulators have been given jurisdiction over specific areas of economic activity like telecom or electricity. Often these regulatory institutions include a dispute resolution panel which resolves disputes which arise out of the regulatory process. Several of these regulations and decisions taken under these regulations have been challenged in the courts. The High Courts and Supreme Court have decided a wide range of cases but have resolved each of these disputes under their respective statutes and have failed to identify the common doctrinal and theoretical issues common to cases across these statutes. The failure to do so has resulted in a patchwork of cases which are irreconcilable in a principled fashion. Moreover, the academic literature on these cases has tended to adopt the same approach. Recent publications of commentaries on Infrastructure or Communications law approach each regulatory statute and sector independently. Most commentaries on Administrative Law fail to account for this area of law altogether. In this paper I will show that it is useful as a theoretical and practical matter for us to recognize regulation law as comprising a coherent body of doctrine which may be understood to apply across sectors of regulation and across the statutes which govern them. I will demonstrate this in three areas: institutional design of regulators, process of regulation, process of dispute resolution.
The introduction of the ‘independent regulatory institution’ into a country’s legal system has been viewed in a different light depending on the historical and political context of the country. In India, these institutions were seen to be an integral part of the ‘structural adjustment’ of the Indian economy after 1991 and hence largely perceived to be a process of reforming the Indian state with largely adverse economic and social consequences for the poor or disenfranchised in India. In this paper I will argue that the development of a doctrinally sound and theoretically well founded ‘regulation law’ may initiate a model of governance which may have significant democratizing potential in key sectors of the economy and may thereby constitute a progressive development over pre-existing models of departmental decision making. Secondly, I will engage with the nascent literature on ‘new governance’ which claims that these reforms may well be harnessed to progressive ends in a significant and sustained manner.
The standard prescription for designing good regulatory institutions typically includes the words “independence,” “transparency,” “accountability,” “expertise,” and “credibility.” These words convey important principles, the implementation of which must be informed by the local context. These principles are important because they affect the regulated entities, especially since regulation causes redistribution of the rents among various interest groups. “Independent” regulation is a relatively new concept in India. To create an entity operating with transparent procedures, necessarily takes time to create and mature, and its independence and credibility are established on the basis of both their legal foundations and their actual behaviour. Regulatory independence is multifaceted and includes independence from government, independence from stakeholders and organisational and financial autonomy/independence. The issue of independence assumes greater importance in telecom in India since the government has full control of the incumbent operating enterprise (BSNL).
TRAI was created to regulate the telecom sector in India in 1997. Since then it has had a tumultuous relationship with the policy maker, including being stripped of its dispute settlement powers in 2000 following an Amendment to the TRAI Act. Many commentators have questioned its independence, especially after 2000. The powers and independence of the amended TRAI Act, 2000 were arguably less than that of the old TRAI. While its powers were curtailed, growth of the sector as reflected by data on physical achievements showed tremendous progress. This paper will examine the challenge of establishing ‘independent’ regulatory agencies in the telecom sector in India. A number of ‘episodes’ demonstrating independence (or lack thereof) across the 4 regimes will be examined, while at the same time investigating the impact on changes in physical and financial performance from one regime to the other. One inference from sector performance could be that the quality of regulation did (does) not matter in telecom because of the simultaneous impact of favourable factors, such as technological progress. The larger question therefore is whether the quality of regulation matters in telecom. This will be carefully analyzed and an attempt made to quantify sector performance in the light of alternative regulatory decisions.
India has a decade-long experience with independent regulatory agencies in public services as an institutional transplant from the industrialized world. Introduced at the behest of international donor agencies, regulators in India are intended, somewhat naively, to provide an apolitical space for decision making to assuage investor concerns over arbitrary administrative actions, and thereby stimulate private investment. In practice, regulators have had to negotiate a terrain over which the state has continued to exercise considerable control. Regulators have also been shaped in their functioning by national and sub-national political traditions and by administrative and political practices. The result is a hybrid institutional form that combines politics as usual with intriguing new and unanticipated opportunities for political intervention.
This paper will explore how Indian infrastructure regulators re-institutionalize the politics of power by drawing on three case studies of electricity regulators. Far from providing an apolitical space, they indeed practice politics, but in ways that are constrained by their particular institutional form. Notably, they are compelled to provide explicit, if often strained, reference to a technocratic framework, demonstrate compliance with administrative law provisions of transparency and due process, and grapple with the ambiguities of their relationship with other branches of government. These structural features are further made complex by idiosyncrasies of personality and history that affect regulatory practice within each regulator. The result is a complex new institutional terrain with implications not only for Indian economic outcomes but for the nature of Indian politics.