Since the 1980s, regulation has been a dominant mantra in economic reforms in developed countries. The Government of India (GoI) too, in the wake of reforms in the 1990s, zealously appointed regulators as an alternative to the direct control of industries - in telecommunications, banking, capital markets, insurance, hydrocarbons and electricity. But Indian regulatory authorities have by and large been ineffective.
In this pioneering study of India's telecom sector, author Ashok Desai - eminent economist, former advisor to the GoI on economic reforms, and columnist - examines the reasons why regulation does not work in India.
- Challenges the use of naive indicators like teledensity and the proportion of villages connected to claim regulatory success
- Identifies systemic causes for the ineffectiveness of regulators in Indian conditions
- Argues that an independent regulator is incompatible with the government's ownership of operators and retention of a powerful executive department
- Proposes, among other solutions, the opening up of industry to local competition by delicensing last-mile operations
A meticulous account of the conflict between the regulator and the government, the book shows how the players in government and industry use red-tape, political intrigue, and the courts to achieve their ends. Many of the lessons of this study are applicable to other industries and regulators.