Regulations should minimise non-compliance, boost activity: Irdai chief

Irdai Chairman Ajay Seth advocates smart regulation and deregulation to balance compliance with growth and strengthen economic activity in India

Insurance Regulatory & Development Authority of India (Irdai) Chairman Ajay Seth said on Friday that the objective function of regulations should be to minimise non-compliance with rules and regulations while maximising the facilitation of economic activities. 

 

Speaking at the release of the ‘Report on Regulatory Governance’ by Jindal Law School, Seth said the objective function of regulations for India, with its growth and development aspirations, should be to minimise non-compliance with rules and regulations, subject to maximum facilitation of economic activities rather than maximising economic activity, subject to zero non-compliance. He also said that regulations were essential for promoting competition, protecting consumers, and public safety, and ensuring fair markets. But their core purpose was much larger than just fixing market failures. 

 

 

Regulators also face challenges in balancing efficiency, stability, and distribution. In general, activities that can be reversed if harmful should be guided by principles rather than prescription, which has a far-reaching impact that cannot be reversed or can have stability-related concerns, said Seth.  

 

Seth said that in a world, which was facing export, energy, and climate constraints, it was necessary to maximise domestic levers of growth. When focused on that area, appropriate regulations by the way of deregulation in various areas as well as better regulations in others becomes a necessity for all of us.

 

“The way forward has to be through deregulation, as well as better regulations. Deregulation, to my mind, is not laissez faire, but it means smart regulations, smart oversight instead of prescriptions,” Seth said.