The Indispensable Role of Centralized Regulatory Review and Cost-Benefit Analysis
Editor’s Note: The following article from India’s leading English language daily business newspaper discusses the need for the government to “empower a super-charged body to review proposed rules and regulations” to ensure that and cites OIRA as an exemplar.
At a time when questions are raised in the US about the need for strong centralized review of regulations and rigorous cost-benefit analysis, we can learn from the experience of industrial countries that lack centralized about the consequences of undersupervised regulatory power. India should also consider learning from the United Kingdom’s experience with centralized regulatory review.
From: Business Standard (India)
Nick Robinson: The red-tape rules
Without an independent body to scrutinise the rules bureaucrats tack on to legislation, genuine reform of red tape will always be delayed
It is not news India has a red tape problem. Whether you are a day labourer in Jharkhand attempting to prove your official residence, a Delhi car owner who has to remember to get a “pollution under control certificate” four times a year, or a businessperson trying to do, well, almost anything, India’s numerous rules and regulations can be both overwhelming and dispiriting. You could be forgiven for thinking these rules more often seem designed with bureaucrats in mind than citizens — and you wouldn’t be that wrong.
To understand the challenge of changing this system you have to appreciate where all these rules and regulations come from. Parliament passes laws; but it’s the bureaucracy in each ministry that writes the rules that actually implement legislation. Think of legislation as laying out the broad goal — for example, stopping factories from emitting excessive pollutants — and the rules as describing the details for how to actually achieve this goal — i.e., which pollutants can be emitted, and in what quantity.
Remarkably, although all rules proposed by the Government of India must be tabled before Parliament prior to coming into effect, in reality these thousands and thousands of pages are rarely read by Members of Parliament. In other words, the very substance of the law is often written and decided by just a few bureaucrats with little real oversight. The committees in the Lok Sabha and Rajya Sabha tasked to scrutinise proposed rules and regulations are short-staffed; and, in a recent report, the Lok Sabha committee complained the ministries do not even follow its recommendations without constant pestering.
Meanwhile, bureaucrats have an incentive structure that breeds the creation of unnecessary or heavy-handed rules. After all, if the rules require that to access a government service an applicant must show three forms of identity proof and submit the application in triplicate (including one that is notarised), an official has ensured he or she cannot be blamed if someone accesses the programme who should not. The problem is that such a cumbersome process adds huge costs for the applicant and fosters corruption: the more rules there are, the more reason to pay off someone to get around them.
Rules can also undercut civil liberties. Last year the government notified the Information Technology Rules (2011). Critics claimed that its provisions were far more draconian than the actual Information Technology Act (2000) that it was implementing. Amongst other provisions the rules required websites like Facebook or Yahoo to remove content that was deemed “harmful” or “blasphemous” even if posted by third parties. Many observers argued that monitoring so much content was not only technically infeasible, but could lead to self-censorship, striking a major blow to social media and free speech in India.
The answer to this problem is not to get rid of rules. Deregulation has its own costs. Instead, it lies in creating smarter rules. Two interventions could help. First, there should be a mandatory public comment period for all new rules and regulations before they are passed. Right now some ministries make proposed rules public and elicit comments, but not all, and often these comments are not made publicly available or even acknowledged. Comments from civil society, business, or concerned citizens can act like an alarm bell, drawing the attention of politicians, bureaucrats, and the media to misguided or inefficient rules. All new proposed rules should come with a short note from the respective ministry explaining the costs and benefits they expect from framing the rules in the way they did. The public can then use this note as background for their comments.
Public comment, or the threat of it, will help add discipline to the process of rule-making. Still, for many proposed rules the public may have neither the competence nor the interest to act as a reliable watchdog. As such, the government should empower a super-charged body to review proposed rules and regulations. In the United States, the Office of Information and Regulatory Affairs does a rigorous cost-benefit analysis on proposed federal rules and regulations before they are adopted. Such an analysis in India should look at the costs and benefits of the proposed rules in relation to the Budget, economy, social well-being, and their potential manipulation for corruption.
This oversight body should be staffed with professionals drawn mostly from outside the ranks of the civil service so as to provide fresh perspective and a meaningful check on government rule-making. The Comptroller and Auditor General (CAG) already performs this cost-benefit analysis for some legislation and policies of the government, and so might seem like a natural home for such a body. However, critics claim that this analysis role has distracted the CAG from its more central — and less glamorous — role of auditing government accounts for corruption.
Wherever the body sits, and whoever it is answerable to (Parliament, the Prime Minister, or both), it will face federalism challenges. Many of India’s rules and regulations, including those that affect people’s lives most directly, are promulgated at the state level. States can and should also mandate a public comment period for proposed rules. However, it’s too costly to create an oversight body to scrutinise proposed rules in every state. Instead, the national body will need to be able to help oversee rule-making at the state level, most likely through advice and information sharing.
A country’s rules and regulations should be framed to work effectively for its citizens, not its bureaucrats or anyone else. Excessive red-tape breeds corruption, threatens liberty, and undermines the very purpose of legislation and policies. More transparency and public participation, as well as auditing by an independent body, would go a long way toward making sure citizens are central to the rule-making process.
The writer is a visiting fellow at the Centre for Policy Research, New Delhi