KnowledgeTransfer@CarnegieIndia is an initiative that aims to provide a platform to facilitate the genuine exchange of ideas and knowledge among students, practitioners, subject-matter experts, and other interested audiences.

Today, independent regulators govern large sectors of the Indian economy, from financial markets and airports to telecom and electricity utility companies. Consequently, independent regulators constitute an increasingly important institution of governance in India, and their effectiveness has important consequences for India’s political economy. Yet, there is little understanding of the rationale for creating such regulators, the mechanisms through which they discharge their functions, and the impact that they have on the economy.

Carnegie India hosted a KnowledgeTransfer@CarnegieIndia workshop to examine the regulatory landscape in India with Prasant Regy, a senior fellow at the Rajiv Gandhi Institute for Contemporary Studies and Anirudh Burman, associate fellow at Carnegie India.

Discussion Highlights

  • The rationale for independent regulators: Participants began by discussing what independent regulators are and their purpose as delineated by the Indian constitution. Independent regulators are created by parliamentary law and are accountable to parliament. They are not a part of regular government departments and thus, are not directly accountable to the cabinet ministers. It was also noted that unlike regular departments, the independent regulators are entrusted with a limited jurisdiction and range of functions. Participants discussed how independent regulators are essential in various sectors like financial markets, electricity boards and telecommunications. For example, participants considered financial markets and noted that regulation is crucial to correct certain market failures like inefficient allocation of goods and services, asymmetric information, market instability and market monopolization. They pointed out that traditional government departments are not ideally placed to provide the required expertise, not least because the lack of autonomy doesn’t grant them the flexibility to perform this task effectively. 
  • Design of Independent regulators: Participants proceeded to discuss how the regulatory authorities are designed. Typically, government departments are designed in a way that the three powers—executive, legislative, and judicial—are separate. However, regulators combine all these powers within the same agency. Regulators have the power to set standards, monitor compliance and punish violations. This comingling of separate functions within the same agency helps improve organizational efficiency, thereby leading to better performance. They noted that the institutional design of regulatory bodies—like composition, procedures for appointment or removal of board members and independent funding—helps de-politicize their decision making. . They also discussed that the regulators’ accountability is limited and finite which leads to their greater independence in regulating markets.
  • Measuring regulators’ performance: Participants noted while regulators themselves exist to provide oversight, it is also important to measure how effective regulators have been in solving problems that led to their creation in the first place. While regulators enjoy a significant autonomy form the government, they are also accountable to the parliament. Devising ways to measure regulatory performance will improve the functioning of the regulator, thereby improving its effectiveness. Even as participants noted the practical difficulties associated with measuring the performance of a regulator, they emphasized the pressing need to develop measurable benchmarks that could help us understand the performance if regulators in clearer terms. 
  • Insight into regulation by IBBI: In the second session, participants took the example of the Insolvency and Bankruptcy Board of India (IBBI) to understand its functioning in detail. The IBBI was set-up on October 1, 2016 under the Insolvency and Bankruptcy Code (IBC), 2016. It has regulatory oversight over the Insolvency Professionals, Insolvency Professional Agencies, Insolvency Professional Entities and Information Utilities. It was noted that in a lot of cases for insolvency resolution, government is one of the lenders, or the borrower; therefore, in order to avoid any conflict of interest, an independent regulator like the IBBI is more desirable for maintaining oversight over the entities involved in the insolvency process. The session discussed the origins of the IBC in the wake of the Non-Performing Assets (NPA) crisis in the Indian banking sector, and the benefits of a modern bankruptcy law for the Indian economy. Participants discussed the key features of the IBC, including the role of entities that are regulated by the IBBI, such as insolvency practitioners and information utilities. They also discussed the legal provisions that ensure the independence of the IBBI from the government and noted the potential ways in which this independence could be compromised. Participants also discussed public choice theory to understand the dangers of unaccountable regulators with too much discretion. They mentioned that while independence is important, regulators could act in their self-interest without adequate mechanisms for holding them accountable. This principle was then used to discuss issues related to the independence and accountability of the IBBI. Participants concluded by saying that the IBBI, being an independent regulator, offers numerous benefits. At the same time, consistent efforts have to be made to ensure that it is held accountable for its performance. One such mechanism is the IBBI’s regulation that provides for a rigorous consultative framework for writing regulations. 

The event summary was prepared by Shipra Walia, a research assistant at Carnegie India.


9:45–10:00 a.m.

Welcome Tea 

10:00–11:30 a.m.

Session 1: Independent Regulation in India and Measuring Regulatory Performance

  • Anirudh Burman, associate fellow, Carnegie India

Coffee Break

11:45 – 13:00

Session 2: An Insight into Regulation by the Insolvency and Bankruptcy Board of India

  • Prasanth Regy, senior fellow, Rajiv Gandhi Institute for Contemporary Studies


Anirudh Burman

Anirudh Burman is an associate fellow at Carnegie India. He works on key issues relating to public institutions, public administration, the administrative and regulatory state, and state capacity.  He has also worked extensively on financial regulation and regulatory governance. Burman’s current research interests focus on property rights and land markets, particularly the regulatory framework affecting land rights and land titles, the relationship between tenure security and land transactions, and public administration issues in land markets in India.

Prasanth Regy 

Prasanth Regy is a senior fellow at the Rajiv Gandhi Institute for Contemporary Studies. Previously, he has worked at the Insolvency and Bankruptcy Board of India, and the National Institute of Public Finance and Policy, on projects relating to judicial system reforms, bankruptcy, disaster resilience, and agricultural warehousing. He has worked with the World Bank in the design and implementation of rural livelihoods projects in Andhra Pradesh and Telangana. He also has experience in microfinance, SME finance, and enterprise software sectors.