Strengthening regulatory bodies: Key reforms for efficiency, accountability

This column is not focused on analysing the performance of regulators, but rather on examining certain broad core issues that need to be addressed

Microeconomics 101 explains the causes and effects of market failures in a free-market economy, as well as the need and justification for regulators. Over time, even developing economies have realised that having credible and well-reputed regulatory institutions is a prerequisite for sustainable growth.

 

The enactment setting up a regulator should have a clear purpose, explicitly stating the objective, role, appointment procedure, powers and functions, guiding principles for regulation, appellate mechanism, and how the regulator will be held accountable. The regulator must have operational and financial independence, and the law should unambiguously prescribe that.

 

A number of regulatory bodies have been