Focus on Economy

Economy & Regulation | 16 Mar 1530-1730

With emerging policy and regulatory challenges, there is an increased focus on creating new regulators. The boom in sectors such as crypto and gaming has amplified the demands for centralised regulation in place. However, certain questions come to the fore when talking about the creation of new regulators. Is there sufficient legislative and judicial backing to any new regulator so that they can function effectively and have a strong mandate to execute their functions. Since the actions of the regulators have far-reaching ramifications, they have to be backed by policy analysis and should have a cost-benefit analysis element attached to them. Because if there is uncertainty about the reach and jurisdiction of these regulators, there are some important questions that need to be discussed

• What have been the learnings from IFSCA as a financial regulator? How can it be scaled?
• How do regulators choose the best intervention tools to ensure consumer protection regarding several issues in the market?
• The regulators are given the mandate to inspect several issues. How is it ensured that the regulators are following due process while conducting investigations and levying fines/penalties?
• How can it be ensured that there is capacity building in the regulators to engage in Cost-Benefit Analysis (CBA) before embarking on enforcement of key regulations?

In addition to this, there is the issue of the establishment and empowerment of IFSCA (GIFT City) as a unified financial regulator. Although there is no doubt that GIFT City is a forward-looking and future-ready idea, there are questions about relaxed capital controls in the geographical areas of financial SEZs. This raises the question of why the concept of GIFT City not be applied to the entirety of India.

The pandemic has seen the geographical redistribution of the entire IT industry, is there any possibility of the development of financial hubs across the country without limiting them to particular geographical locations. This can enable the dividends of India’s growth as a financial hub to be distributed more equally.