Regulatory Practice and Politics: Lessons from Independent Regulation in Indian Electricity

12 Pages Posted: 3 May 2012

Date Written: November 27, 2007

Abstract

Although independent regulatory agencies are emerging worldwide, there remains little understanding about how they operate in practice, particularly in developing countries. This paper seeks to examine the practice of electricity regulation in India, using case studies of three state-level electricity regulators. Based on documentary analysis and interviews with regulators, government, utilities and stakeholders, the paper examines how regulation is shaped by institutional and political context, how regulators make decisions in practice, and how they engage with stakeholders and with what effects. Based on the Indian experience, we suggest that in a rapidly changing electricity sector, the separation between the political and economic content of regulatory decisions, as is often advocated, may not be feasible or indeed desirable. Instead, we suggest a more proactive regulatory approach where governments give regulators the latitude to proactively steer the sector. For this approach to be viable, regulators need to build adequate technical capacity, institutional legitimacy, and democratic legitimacy in their dealings with stakeholders. This approach entails a bolder, and more challenging vision of regulation, but one that promises greater transformational potential than does the model of technocratic and apolitical regulation.

Keywords: electricity, regulation, India

JEL Classification: L5

Suggested Citation

Dubash, Navroz K. and Rao, Narasimha D., Regulatory Practice and Politics: Lessons from Independent Regulation in Indian Electricity (November 27, 2007). Utilities Policy, Vol. 16, No. 4, 2008, Available at SSRN: https://ssrn.com/abstract=2050291

Navroz K. Dubash (Contact Author)

Center for Policy Research (India) ( email )

Dharma Marg
Chanakyapuri
New Delhi, 110 021
India
+91-11-2611-5273 (Phone)
+91-11-2687-2746 (Fax)

Narasimha D. Rao

IIASA ( email )

Schlossplatz 1
Laxenburg, A-2361
Austria

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