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Regulation suffers from legacy of weak institutions: Chawla

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New Delhi: Observing that regulations in the country suffer from a “legacy of weak institutions”, CCI chief Ashok Chawla today pitched for an over-arching legislation to ensure uniformity in economic regulations to the extent possible.

The Competition Commission of India (CCI) Chairman also cautioned that state interference in the functioning of regulators for vested interests is undesirable.

Noting that regulators seem to have become the ‘mantra’, Chawla said there are perhaps one too many, particularly in the financial sector.


Regulation also suffers from a legacy of weak institutions in countries like India which renders the regulatory contract between governments and regulated entities incomplete,” he said.

He was speaking at the foundation day function of in ustry body Assocham here.

“Perhaps there is a need for a helicopter view of the regulatory structure and an over arching legislation which brings about uniformity in design and structure to the extent necessary,” he noted.

Chawla said that continued interference by the state compromises the efficiency enhancement role of the regulator.

“For an independent regulator to deliver, state actors have to forbear. Intervention to promote public policy or redistribution objectives to some extent understandable. However, interference to protect vested interests is undesirable,” he said.

According to him, effective regulatory incentives and governance regimes are required. If any one of them is weak, there is likely to be a continuing threat of regulatory failure, he added.

“The philosophy guiding the creation of independent regulatory institutions is that direct regulation by the state is not appropriate as it amounts to the fox guarding the chicken coop.

“… it invites state actors (politicians and bureaucrats to frame regulations, which may not be aligned with the larger public interest and the commercial interests of the service providers,” the CCI chief said.

Creation and sustenance of independent regulatory institutions requires a high degree of political and judicial maturity. “We are slowly moving in that direction. But this cannot happen in a day,” he noted.

Touching upon the issue of regulatory uncertainty and consequent risks, Chawla said since the architecture is work in progress, conflicting policy signals could clash with regulator objectives.

“The end result: a foggy horizon which business, particularly, cross-border ones find difficult to decipher,” he said.