Somasekhar Sundaresan: Regulatory lessons from Delhi gang rape

The nation is outraged.  The gang rape in New Delhi has led to protests ranging from changing the profile photographs on social media accounts to a black dot, to generating online campaigns for introducing the death penalty as a punishment.  As emotions run high, the quality of discourse too ranges from the sublime to the ridiculous.

These developments underline a larger conceptual lesson in policy-making and law-writing.  When society is faced with developments that shock its conscience, the resultant public outcry can cloud one’s thinking.  Often this leads to measures that generate a delusion of an effective response, but lack the real core substance necessary to address the problem.

Take for example, the most prominent clamour for capital punishment.  If capital punishment could prevent and deter rape, it would have deterred terrorism.  In reality, it is not the magnitude of the punishment, but the fact that our criminal justice system is in a shambles, that has impeded deterrence.  Yet, the clamour for capital punishment could well lead to the minority voice of reason being drowned, the law getting amended to incorporate the death penalty, society getting its bloodthirst quenched, and yet social impact remaining a mirage. 

For the immediate, it would lead to everyone being satisfied – the law-makers would feel they have delivered on citizens’ demands, the citizens would feel they got the law changed, and a false lull of comfort would soothe frayed nerves.  However, regardless of the severity of the punishment, the next case would still feature the same justice delivery system, saddled with back-breaking workload, over-worked judges, under-incentivised delivery costs, and dissatisfied litigants.

Regulatory responses in the financial markets too follow the same pattern. Examples abound.  When the Reserve Bank of India found that preference shares, which are not debt, grew in popularity for attracting foreign investment in sectors where contracting debt was not favoured, it simply said that preference shares would be treated as external commercial borrowings.  When the Securities and Exchange Board of India got worried about the quality of securities offerings or the short-term pricing of shares upon listing, it advocated introducing a mandatory “safety net” to ensure investors do not suffer losses beyond a threshold, and wrote rules to enable itself to prohibit securities offerings on grounds of “quality”.

There is a comparable metaphor – handed down from no less a forum than the Supreme Court of India.  The court had legislated that usage of sun control films on car windows is against public policy since it leads to occurrence of crime behind tinted windows.  In fact, in the last few days, particularly after the rape in Delhi was reported, policemen in Mumbai have gone into an overdrive, stringently forcing vehicle-owners to remove sun control films from their windows.

The highest court of the land often gets into the legislative and policy-making domain playing its activist role.  Prime examples: The court ruled that auction is the only method for government to follow in distribution of any resources, when faced with public outrage over the “2G scam”.    

A dispassionate analysis by the Supreme Court when ruling on the Presidential Reference in the aftermath of the 2G scam judgement resulted in the requirement of auction being the sole method being overturned.  Equally, a dispassionate analysis of the ban on sun control films would show the futility of imposing such measures.  How about ruling that no homes should have tinted windows since crime can take place behind closed doors?  

Any critique of this nature runs the grave risk of being pilloried as an insensitive attack on noble causes.  The truth however lies in recognising that the most laudable policy objectives can never justify futile or ill-conceived measures. Criticising the introduction of mandatory safety net cannot mean that the critic is an enemy of investors.  Pointing out that a regulator without powers should not be enforcing law that some other regulator is meant to enforce does not mean that one is a supporter of anarchy.  If it were, then no one could have faulted Sanjay Gandhi and his team for picking up citizens during the Emergency for forcible sterilisation. Indeed, he too had his sympathizers. 

Intuitive policy-making requires one basic foundation – a strong self-belief that wisdom vests unconditionally in the policy-makers. 

Instead an empirical approach to policy-making will ensure that before writing a policy, one has to apply one’s mind to evidence that would make it reasonably certain that the policy would nudge society into a certain pattern of behaviour.  It entails an open mind, an ability to listen to society and the capacity to engage with inputs received.

(The author is a partner of JSA, Advocates & Solicitors.  The views expressed herein are his own.) somasekhar@jsalaw.com