Need to Regulate the Regulators

The system of regulating economic activities - primarily those areas which had been the exclusive preserve of the state or the public sector - and protecting consumer interests by statutory regulatory bodies is still evolving in India. All of us know that there can never be a free-for-all in a market economy, howsoever open it is. The operation of a free market economy in a smooth manner, and without hurting consumer interests, is simply not possible or feasible without an effective regulator, or what has come to be known in India as a regulatory authority, in place.

Decontrolling

India's tryst with free market forces began in 1991-92, when the duo of former Prime Minister late P V Narasimha Rao and then Finance Minister Dr Manmohan Singh progressively abolished industrial licensing, controls and quota raj. Except for a few sectors where one may still require a licence, the system of industrial licensing was abolished for practically every consumer and capital goods industry.

In the realm of services, the then government began with allowing the private sector to enter the power generation business, by offering many projects that could not be undertaken by the public sector for some or the other reason. This was soon followed by the telecom sector, with the government allowing the private sector to offer cellular services from 1994-95, and following it up with the entire gamut of telecom services.

The aviation business was also eventually opened to the private sector, which was allowed to run and operate airlines in the first phase. Now, however, even airports can be owned and operated by free enterprise. The government even delicensed the oil refining business and today allows 100 per FDI in the refinery business.

We now even have private sector petrol pumps. Insurance business, which was a state monopoly after government nationalised the insurance sector in the early 1950s — like the airline business, came a full circle when private sector was allowed in with a 26 per cent FDI cap to offer life and non-life business in India about 10 years ago. Now the government is even allowing the private sector to offer piped supply of gas for domestic users, which had been public sector monopoly till some years ago.

The list of all those areas of economic activity that were a state monopoly once, and have or are being opened to the private sector, is virtually endless. There were, of course, many reasons for this change of heart that led the government to allow free market forces and entry of the private sector. The major among them was the serious lack of resources available with the government, and the growing aspirations of the common man to get all those basic necessities of life which had been denied to him under the license-quota raj of four to five decades.

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I was speechless. Rather hesitatingly I asked him, “So, what have you decided, Sominder ?” His reply was curt and candid, “I have told the doctors that I don’t want to live life as dumb. Only...

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