Flag-Bearers of a New Era?: The Evolution of New Regulatory Institutions in India (1991-2016)

This chapter provides a critical, descriptive account of the emergence of a select few regulatory state institutions in India since the early 1990s, when the national government initiated a series of new economic policies. The creation and evolution of these institutions has arguably altered the landscape of Indian administrative law in fundamental ways, the significance and impact of which has yet to be carefully studied and understood. In describing the factors that influenced the formation and evolution of these new regulatory institutions, I analyse their original design and critically assess their functioning across the quarter century of their existence. The momentous events of 1991 heralded a series of changes in the economic, political and legal landscape that some believe ‘transformed India in the everyday’. The quarter century anniversary of those events provides an auspicious occasion to reflect upon and review their consequences. The Indian ‘regulatory state’ is characterized, as in other jurisdictions, by: an expanded role for markets, greater private sector participation in all facets of societies, and withdrawal of the state from the direct provision of services and as the dominant employer. The new regulatory state is said to have been motivated by a desire, held closely by at least some of its principal actors, for ‘greater reliance on institutions operating at arm’s length from government, insulated from daily political pressures, and embedding their decisions in technical expertise’ (Dubash and Morgan 2013, 3). A principal objective, apparently, was the hope that the new regulatory institutions would transform what was a hopelessly politicized governance culture into one that was rule-bound, apolitical and technocratic in its design and operation. The chapter is organized as follows: Section 1 focuses on the way the framers of the Indian constitution conceived of economic regulation, and reviews the post-independence experience with economic regulation until the early 1990s, before detailing the new regulatory institutions that emerged and analyzing some of their structural features, powers, capacities and limitations. Although dealing with new regulatory institutions as a whole, the focus is on three sectors: telecom, electricity and the securities sectors. Section 2 unpacks the concept of independence both conceptually and as it has been incorporated into the new regulatory institutions in India, before suggesting some ways to resolve the problems that these regulatory institutions have confronted. I argue that as these regulatory institutions mature and move into the next phase of their evolution, far greater attention needs to be paid to the appointments process and the persons who are selected as regulators. There is a dire need for specialized knowledge and skills. The current system where mostly retired bureaucrats are appointed to these positions needs to be reviewed and changed.