The survey said that there is a vast evidence of the benefits of RIAs in terms of better quality of regulations and reduced compliance burden, thereby reducing the cost of compliance for businesses. RIA is also effective in improving the transparency and responsiveness of the regulatory bodies thereby improving credibility.
It suggested that one approach to RIA would be to set up an independent agency housed inside the regulator to evaluate the regulations from all angles. This agency will report to the board and not to the management, providing an impartial and objective assessment of the regulatory processes and outcomes, including the economic and social impacts of regulations.
“Given the country’s low financial literacy and lower-middle-income status, ensuring stability is essential to prevent systemic risks and protect consumers. However, this should not come at the expense of stifling creativity, innovation, or healthy market dynamics. At the same time, an excessive focus on innovation and competition without adequate safeguards can lead to financial instability, resource misallocation, and erosion of trust in the system,” the survey said.
Striking this balance is particularly critical for India, considering its vast and diverse economy, growing aspirations, and substantial investment needs to sustain high growth and development. “Regulators must consistently strive to achieve this equilibrium, and the suggestions if implemented, will help them pursue and maintain that balance effectively,” the survey said.
