Challenges Faced by Regulatory Commissions in India

Regulatory commissions occupy a pivotal position in India’s governance architecture. From setting electricity tariffs to overseeing telecom spectrum allocation, these bodies are expected to function as independent, expert-driven watchdogs that balance the interests of consumers, service providers, and the state. Yet, despite their legal mandates and institutional frameworks, many of these commissions continue to struggle with deep-rooted structural and operational challenges. Understanding what ails them is the first step toward fixing them.

The problem of unclear roles and overlapping jurisdictions
Lack of service benchmarks
Shortage of trained manpower and technical expertise
Insufficient consumer participation
Political interference and regulatory capture
The way forward

The problem of unclear roles and overlapping jurisdictions

One of the most persistent challenges in India’s regulatory landscape is the blurring of boundaries between government ministries, regulatory commissions, and the judiciary. When responsibilities are not clearly defined, the result is confusion, turf battles, and policy paralysis.

The telecommunications sector offers a striking example. Both the Department of Telecommunications (DoT) and the Telecom Regulatory Authority of India (TRAI) wield significant influence, sometimes with contradictory approaches, leaving service providers to navigate conflicting directives from two different authorities. In the electricity sector, state electricity regulatory commissions may issue tariff orders that run contrary to central government policies, creating yet another layer of jurisdictional friction.

The OECD’s regulatory policy review of India noted that continued interference by local politicians through the issuance of opportunistic “policy” directives has resulted in legitimately mandated regulatory functions being routinely compromised, affecting the effectiveness and independence of regulatory institutions. This is a fundamental design flaw: when the line between “policy-making” (a government function) and “regulation” (the commission’s function) is fuzzy, commissions are reduced to glorified implementing agencies rather than autonomous expert bodies.

The judiciary adds another dimension to this problem. Courts frequently intervene in regulatory decisions through writs and appeals, and the absence of clear statutory boundaries means that important technical decisions are often revisited in courtrooms by judges who may lack sector-specific expertise. A regulator’s considered tariff order, for instance, can be stayed by a court before it even takes effect, undermining regulatory certainty for both investors and consumers.

Lack of service benchmarks

Effective regulation requires measurable standards. Without clear service benchmarks-minimum quality thresholds, performance indicators, or outcome-based targets-regulatory commissions cannot meaningfully evaluate whether a regulated entity is serving the public interest.

In many sectors, India’s regulatory bodies have yet to establish comprehensive, sector-wide performance standards. This creates a situation where a utility or service provider can technically “comply” with regulations while still delivering poor-quality services. A power distribution company, for example, might meet narrow legal requirements while subjecting consumers to hours of daily outages and erratic voltage levels-neither of which may be explicitly captured in a binding regulatory benchmark.

The absence of benchmarks also weakens accountability. Without defined targets, it is nearly impossible to audit performance objectively, impose penalties for underperformance, or demonstrate regulatory effectiveness to the public. As NextIAS’s analysis of regulatory bodies in India points out, many regulatory bodies function in a reactive rather than proactive mode-responding to complaints and crises rather than setting and enforcing prospective performance standards that prevent problems from arising in the first place.

Shortage of trained manpower and technical expertise

Regulatory commissions are tasked with understanding and overseeing highly technical sectors-electricity grid management, spectrum allocation, insurance actuarial models, pharmaceutical approvals. For such oversight to be meaningful, they need staff with specialized, up-to-date technical knowledge. This is precisely where many commissions fall short.

The problem begins at recruitment. Many commissions rely on deputation of generalist civil servants rather than hiring sector specialists. The Insurance Regulatory and Development Authority of India (IRDAI), for instance, faces challenges in training staff to understand complex actuarial models and emerging insurance products, potentially exposing consumers to inadequately scrutinized financial products.

A related problem identified by the The Energy and Resources Institute (TERI) is that the tenure of many regulators is too short. By the time they develop a working understanding of the sector’s complexities, their term ends. Finding replacements is itself a slow process, and deliberate delays in filling these posts are not unheard of. This creates institutional knowledge gaps that undermine regulatory continuity.

Even when qualified personnel are recruited, ongoing training is often neglected. Regulatory frameworks evolve, technologies change, and new business models emerge constantly. A commissioner who was well-informed at the time of appointment may be significantly out of date within a few years if there is no structured programme for continuous professional development. The result is that decisions affecting millions of consumers and crores of rupees in investment are sometimes made without adequate technical grounding.

As observed in the context of India’s drug regulation, dedicated autonomous regulatory bodies require transparent quality management systems, ongoing professional training, internal audits, and independent review processes to achieve meaningful regulatory maturity. Sectors where these elements are absent tend to underperform on public-interest outcomes, regardless of how well-intentioned the legal framework may be.

Insufficient consumer participation

Regulatory commissions derive their legitimacy from the public interest mandate they are supposed to fulfil. Yet in practice, the processes by which these commissions make decisions-public hearings, consultations, tariff reviews-are often inaccessible to ordinary consumers.

Regulatory proceedings tend to be highly technical, legalistic, and time-consuming. Industry players and large corporations retain legal teams and technical consultants who actively participate in regulatory processes, filing detailed interventions and shaping outcomes. Individual consumers, consumer groups, and civil society organisations rarely have the resources or expertise to engage at the same level. This creates a structural imbalance where the regulated entities have far more influence over regulatory decisions than the end-users those decisions are supposed to protect.

Consumer forums and commissions across India suffer from staff shortages, with many operating with vacant positions for presidents, members, and administrative staff. This reduces functional capacity, slows down case disposal, and further discourages consumers from seeking redress. Without a well-staffed and accessible institutional mechanism, consumer voice in regulatory processes remains largely symbolic.

The Drishti IAS analysis of consumer commissions in India highlights that a large number of posts of Presidents and Members remain vacant in state and district consumer commissions, significantly reducing bench strength and slowing case disposal. This staffing deficit sends a troubling signal: that consumer redressal is not a priority despite legislative intent.

The lack of consumer participation also has a direct bearing on the quality of regulatory decisions. When commissions hear only from industry, their understanding of ground-level service quality, affordability concerns, and consumer hardship remains incomplete. Better mechanisms for structured consumer input-simplified participation processes, funded consumer advocacy groups, mandatory consumer representation in hearings-could significantly improve regulatory outcomes.

Political interference and regulatory capture

Perhaps the most damaging challenge facing regulatory commissions is political interference. For regulation to serve the public interest, it must be insulated from short-term political calculations. In practice, this insulation is far from guaranteed.

The mechanism of political interference typically operates through the appointment process. Government control over the appointment and removal of regulatory commission members creates inherent vulnerabilities to political pressure. When commissioners owe their positions to political patronage rather than merit, their decisions may reflect political considerations rather than regulatory principles. Appointments to state electricity regulatory commissions, for example, frequently favour retired bureaucrats with established political connections over independent sector experts.

Political interference also occurs through formal channels. Governments often issue policy directives that regulatory commissions must follow, effectively limiting regulatory independence. Far from depoliticizing the sector, regulators have actively internalized political sentiments in their decision-making. In the petroleum sector, for instance, pricing and allocation decisions frequently originate from political rather than market-based considerations, placing the Petroleum and Natural Gas Regulatory Board (PNGRB) in the role of a compliance body rather than an independent regulator.

The electricity sector provides the most extensively documented evidence of political distortions. Research published in Energy Policy found that the Indian electricity sector is characterised by policy-level inconsistencies meddled with political interference at all levels of governance, and that electricity regulators are politically driven to set tariffs at a sub-optimal level, not reflecting the true cost of supply. This has sustained a system of cross-subsidisation that, despite its stated pro-poor intent, has often ended up benefiting politically important constituencies at the expense of sound regulatory economics.

A study summarised by the Energy for Growth Hub found that constituencies aligned with the ruling party pay only around 60% of their actual electricity consumption, with the remainder borne by electric utilities-contributing to an estimated net efficiency loss of nearly a billion dollars annually in a single state. When extrapolated nationally, the losses attributed to political manipulation become staggering. Even consumers who nominally benefit from such subsidies ultimately suffer from the consequent poor service quality and frequent power outages.

Financial dependence compounds the problem. Most regulatory commissions depend on government budgetary allocations rather than maintaining financial autonomy. When an institution cannot control its own budget, its independence is structurally compromised regardless of what its founding statute may say.

The way forward

Addressing these challenges requires reforms that go beyond tinkering at the margins. Legislation must draw clear statutory lines between policy-making and regulation, leaving no room for ambiguity about where governmental authority ends and regulatory jurisdiction begins. The appointment process for commission members must be made transparent and merit-based, with terms that are long enough to build genuine sectoral expertise. Continuous professional development must be institutionalised, not left to the discretion of individual commissions.

Consumer participation needs to be structurally facilitated. Simplified intervention mechanisms, funded consumer advocacy bodies, and mandatory representation in key hearings can shift the balance away from regulatory capture by industry. And as the Punchhi Commission recommended, the creation of a “Regulator of Regulators” could provide a meta-level accountability mechanism that ensures consistency and independence across the regulatory ecosystem.

Regulatory commissions have real potential to deliver better governance. But that potential will only be realised when they are freed from the constraints of unclear mandates, talent shortages, consumer exclusion, and political interference.

What do you think? Should the appointment of regulatory commission members be handled entirely by an independent selection panel, with no role for the government of the day? And given the deep technical complexity of sectors like electricity and telecommunications, should India invest in a dedicated regulatory training institution to build a pipeline of specialist regulators?

References

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Table of Contents

The problem of unclear roles and overlapping jurisdictions 🔗

Lack of service benchmarks 🔗

Shortage of trained manpower and technical expertise 🔗

Insufficient consumer participation 🔗

Political interference and regulatory capture 🔗

The way forward 🔗