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Can we provide satisfactory infrastructure services to our people without satisfactory regulation?

Having just finished teaching a course for regulators from five South Asian nations, this para from Pratap Bhanu Mehta’s column on state capacity in India resonated with me.

The second black hole of the state is regulatory certainty. The biggest regression over UPA 2 was that it continued to multiply regulators, while at the same time moving away from principled regulation. It got into trouble in sector after sector because it could not stick to regulatory frameworks with credibility; even in PPPs, it was amenable to arbitrary discretion. This also created openings where other institutions like courts could compound uncertainties. So here is a non-rhetorical question. Do we have any reason to have more confidence that the regulatory capacity of the state is going to improve? The answer is probably, no.

SAFIR, the South Asian Forum for Infrastructure Regulation, was started in 1999, while I was still a regulator. It was a green field then. We knew we had to build up the expertise of the region’s regulatory agencies. So we started with a full-fledged, 10-day course in Agra in 2000 that I taught at (by this time, I was back in the university). The long course died in 2007, due to the refusal of regulatory agencies to pay and send their staff to be trained. Now it is down to 2.5 days, and the numbers are way down from the peak of 100+ in 2003.

I was pleased by the engagement of the 27 or so participants who did attend, as part of their entitlement of one seat per SAFIR member, but overall I cannot conclude that the level of regulatory expertise and performance is qualitatively higher than in 1999 when we started. So the question remains: are the regulatory agencies capable of performing their duties to ensure that the reforms that have, so painstakingly been undertaken, deliver satisfactory performance for the people? Pratap is pessimistic. I am not optimistic.

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