Administrative Theory of Regulation: The Indian Scenario

The state, which regulates conduct in several ways, also regulates through the process of agencification: it creates independent regulatory authorities to set the market right, improve public service accountabilities, ensure proper alignment of incentives, encourage institutional innovation, integrate adequate domain knowledge and bring procedural fairness into the system. As a consequence, there are institutions with a unique administrative identity that are structurally situated at an arm’s length from the control of the state and therefore they are autonomous functionally. It is not only a unique situation in institutional terms but also a matter of establishing balance between autonomy and control in granting justice to the stakeholders. This article examines the realities of the precept in India and, then, reflects on the issues of reform. It keeps the comparative context on regulation in view, particularly the situation since the 2008 Global Financial Crisis and the lessons learnt by the holders of power in democracies.