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Independent Regulators -The Case of the Indian Electricity Regulator

Developing countries have instituted independent regulators (IRs) since the nineties to oversee reforms in and depoliticize infrastructure sectors. IRs are institutions with appointed members, and a unique blend of rulemaking, administrative and quasi-judicial powers. They are supposed to make decisions through a transparent, participatory process, but also exercise discretion. Yet in practice they often exhibit weak outcomes. In India, IRs regulate state-owned utilities, whose clout with government weakens regulators’ powers in practice. Regulatory members and staff come from careers in bureaucracy or the utilities. How do regulators carry out their mandate in this constrained environment? I examine the case of the Karnataka electricity regulatory commission (KERC), a state IR in India. I assess two investment decisions under two different regulators, one a seeming stretch of their powers and the other a weak application. I apply organizational theory to understand their internal decision-making process. Do they operate as rational entities? How does the politicized environment influence their decisions? Does public participation make them more accountable?

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