Llive Mint | 24 March 2017
Delhi and Karnataka authorities have served proof of the heavy hand of regulation in modern India
The colonial British government passed a law in 1867 that gave it powers to punish the owner of any sarai—defined in the law as “any building used for the shelter and accommodation of travellers”—who refused to give free drinking water to people who were passing by. This is one of the many ridiculous laws that the Centre for Civil Society, a think tank, identified in its 100 Laws Repeal Project that sought to cut down the forest of outdated edicts in the country.
The inheritors of the colonial bureaucracy still seem to cling to such ideas. Sarais may be history but there is a new category of innkeeper that can now be harassed. The South Delhi Municipal Corporation has told restaurant owners in its jurisdiction that they have to let the general public use the toilets in their restaurants. The Sarais Act of 1867 clearly lives on in spirit. The decision is clearly an intrusion on the rights of citizens to decide how to use their private property. A government that has failed to build public toilets has chosen the easy way out.
Now, let us move to Karnataka. The state government has in its infinite wisdom decided to cap the price of multiplex tickets. Nobody seems to have told it that it was the decision to give theatre owners freedom to price tickets that led to the multiplex revolution in the first place—and indirectly helped films made outside the mainstream get an audience. It took the satirists at Faking News to predict that theatre owners in Karnataka would make the purchase of expensive popcorn mandatory for every ticket holder. The court jester is often more perceptive than the professional courtiers.
These two examples show that the heavy hand of regulation is very much a fact of life in contemporary India. Most such unthinking regulation is also an invitation for even more bureaucratic intervention. Just go back to the issue of New Delhi toilets. Restaurant owners have been allowed to charge outsiders for the use of their toilets. Smart restaurant owners may have decided to charge very high fees for using their toilets. To prevent this, the government has imposed price controls on toilets; the maximum fee that owners can charge is Rs5. Will it now unleash an army of toilet inspectors to ensure that toilet charges are low? The bribes are bound to follow.
These two examples may seem trivial distractions in a country that is rapidly changing. However, there are three broader points to be made here that tell us what is wrong in much of Indian public policy.
First, rules have to be designed in a way that the incentives of different agents are aligned. Such incentive compatibility ensures that public policy goals are achieved without intrusive regulation. The simplest example of this is the harried mother who lays down a clear rule for her two children before she leaves the house. One child gets to cut the cake she has left behind for them while the other child gets to choose which piece to eat. This incentive-compatible rule ensures that the child cutting the cake slices it down the middle.
Second, the rule maker should realize that those affected by the rule will not be passive spectators but actively change behaviour in response to the new rule. For example, state governments that seek to protect their revenue from liquor sales could very well redefine their major roads in response to the recent Supreme Court judgement that bans the sale of alcohol near state and national highways. Public policy has to take into consideration the strategies of those who are affected by it.
Third, the sociologist Max Weber had said that the bureaucratic state is a rational alternative to power exercised by either tradition or personal charisma. All modern nation states need rules. India is no exception. What matters is how these rules are framed—and whether they empower the state with intrusive powers. This newspaper has often argued in favour of striking literally thousands of laws from the statute books. What most of us do not appreciate adequately is the ability of the Indian state—and unfortunately the activist courts as well—to come up with a new set of badly designed public policy rules.
The conservative philosopher Edmund Burke was on the ball when he said that bad laws are the worst form of tyranny. Indian administrations at all levels revel in attacking the symptoms of a problem rather than trying to fix the root causes. Examples abound on almost a daily basis—and the toilet rule in New Delhi and the multiplex rule in Karnataka are only two of the most recent examples of the sublimely ridiculous. And did someone say something about anti-Romeo squads?
This news was published by Llive Mint