For quite a few days now Indian media is carrying the story about the sand mafia and the actions of an honest civil servant to prevent illegal mining. A though provoking viewpoint has been presented on this issue in an article titled, "Between rock, sand and a hard place" in the Times of India on August 11, 2013. It states that, "[i]n several areas, Indian rules and regulations make honest business impossible. The only choice is illegal business or no business." The author of this article draws attention to the shortage of sand for a booming construction sector on account of " licensing and environmental bottlenecks." The latter creates an artificial scarcity that allows the mafia to step in and profit.I will leave readers to judge the merits of these arguments for themselves.
Why am I writing about sand and construction?
That is because in my view it reflects the same underlying problem that is hampering economic activity in the country today. In a developing country that is (let us accept it), still below par as far as institutional and administrative capacities are concerned, regulation has to be realistic, practical, simple yet sufficiently detailed in order to be unambiguous, leaving little room for arbitrariness/misinterpretation. It should be forward looking so as to not require too frequent review, but it should be reviewed when need be based on well laid down criteria. Most of all it should keep consumer welfare at its focus.
Telecom Regulatory Authority of India's Chairperson (TRAI) has recently commented on the controversial 3G roaming pacts among three large mobile operators in India. According to the Department of Telecommunications, these pacts replicate the characteristics of Mobile Virtual Network Operators' (MVNO) operations, something that is not yet permitted in India. The operators by sharing spectrum and infrastructure were able to provide 3G services to customers even in telecom circles where they had not won spectrum in the 3G auction.
The TRAI Chief is quoted as having said that, " in a situation where there is no more spectrum available, it ay not be possible to continue with a regime where pacts for intra-circle roaming (ICR) in 3G services are not allowed..............This is a Catch-22 situation. How is it (closing down ICR) a solution?”
The article on this issue goes on to say that,
According to [Mr] Khullar Indian law treats spectrum as a holy cow for some reason.
“I can understand that you don’t want to cap gains on assigned spectrum which is administratively allocated. But if everyone is buying spectrum on auction, why not permit trade in it? These are issues on which the government should no longer brook any further delay. A decision needs to be taken,”
Again, I leave it to readers to form opinions. I would just like to highlight that I agree with the TRAI Chief that corrective regulation is the order of the day if consumer welfare and not regulation for regulations sake is our aim.
I also invite readers to go through previous posts on Telecom Regulation and the Market Efficiency Gap to appreciate the importance of effective regulation for growth and equity in telecommunications penetration.
