It is time that India relies on and empowers sectoral regulators set up by Parliament, and backed by statutory powers, as partners in economic development
The new Budget aims to put the economy on track, which requires a real ‘big boost.’ The government has clearly declared its intent to attract investments as part of the Naya India Mission. Investment in infrastructure and technology, innovation and recapitalisation of banks to ensure finance and liquidity are national priorities.
A regulatory ‘booster shot’ is one measure that can do the trick. This requires an intensive, creative, 360-degree, holistic approach. Various sectors of the economy and institutions have to fire all guns, delivering and implementing effectively to translate this goal into ground reality.
Parliament set up sectoral regulators, backed with statutory powers. The time has now come to rely on and empower these regulators—the new age economic regulators—as partners in economic development. This can set the stage for Indian Regulators 2.0—an institution that delivers and implements key national objectives and scripts improvement of the ease of doing business by dishing out an innovative recipe that creates an investment-friendly environment.
Some food for thought:
Creating the right soil
India’s Mission $5-trillion-economy requires core sectors to perform and pile runs on the board. Regulators can play a catalytic role in creating a vibrant, conducive and commercial ecosystem to trigger a cycle of sustained investments.
The power sector is a classic example that can bring more power to India. The sector needs recharging/re-energising for delivering/fulfilling the national goal, i.e., round-the-clock affordable power. This requires the generating companies to invest, to augment generation and create a world-class transmission network. In turn, distribution entities who buy power to supply to consumers must honour payment obligations fully and on time. Similarly, the problem of call drops irking consumers in telecom can be resolved by upgrading existing infrastructure, expanding network capacity and bringing cutting edge technology to the sector.
All this requires a flow of significant and continuous investments. In turn, investments require safety and returns in line with established regulatory norms/benchmarks. Regulators must act as long-distance thinkers and do regulatory forecasting, i.e., create a framework for full-fledged economic regulation.
Regulator as an institution for economic justice
To be the go-to forum, a proactive, forward looking and resolution based approach, which delivers/implements, is vital to win back the confidence of investors.
The role of the regulator needs to be viewed through a wider lens—from being a mere tariff settler to the solution provider of sectoral problems/issues. The regulator as an institution must be the port of call with a ready tool kit to nurse the sector back to health. A robust regime based on economic viability and economic justice will secure/increase sectoral returns.
Just like chefs take into account food preferences and give their dishes a ‘personal touch’, the regulator must have deep and wide-ranging dialogue. Open and transparent communication with multiple stakeholders, based on a wealth of expertise, nip sectoral problems in the bud, remove existing bottlenecks and pave a smooth path ahead. The relationship between the regulator and the regulated should move from a set of “dos and don’ts” for the industry to full-fledged cooperation in order to find innovative, path breaking and effective solutions.
Sanctity of contracts
The most disheartening feeling at a restaurant is to be told that your favourite dish on the menu is not available. Sanctity of contracts is the bedrock, and prompt and timely payment based on honouring the word will bring certainty, predictability and stability, pushing India up the ease of doing business rankings and making it a win-win.
Let us ensure that what is on the menu is served.
The Supreme Court, in a recent landmark judgement, recognised the concept of economic justice in the context of contractual/commercial rights. Regulators must ensure sanctity of contracts is in place. The right regulatory recipe creates the turf which allows full play of market forces within an overarching governance regime, is resolution based and sets upfront the rules of the game, which remain unchanged. This can trigger a regulatory leap forward to make the transition from unease to ease of business. We have to repose complete trust in our regulators and invest in the regulatory mechanism to trigger returns and rewards for all stakeholders. Make in India regulators, i.e., world-class regulators and regulations will get Indian regulators global recognition and can do the trick for investors to take the flight (with capital) to India.
By following the regulatory recipe, things will be on track and in order, that way the dish will be cooked to perfection—a tasty dish that has a long-lasting and lingering effect.
The author is a senior advocate, Supreme Court of India
Views are personal