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Governance, Ethics, Law and International Relations — Group-I · Chapter 2

Policy, Civil Society and Regulatory Bodies

What to remember

  • Public policy is a plan of action by government to solve a public problem. It moves through stages: agenda setting, formulation, adoption, implementation, evaluation and change or ending.
  • Since 1991 India has followed LPG reforms (Liberalisation, Privatisation, Globalisation). The State moved from controller to regulator, so independent regulators like SEBI, TRAI and CCI grew in importance.
  • Civil society (NGOs, self-help groups, associations, media) works between the citizen and the State. Tribunals give quick, expert justice. Lokpal, Lokayukta and the CVC fight corruption.

Public policy: meaning and cycle

A public policy states what the government chooses to do or not to do. Examples are a food security policy, an education policy or an industrial policy. A law is binding rules passed by the legislature; a policy is a guide to action and may be carried out through laws, schemes and orders.

Policy cycle

  • 1. Agenda setting: a problem gets public and government attention.
  • 2. Formulation: options are studied; experts and committees give inputs.
  • 3. Adoption: Cabinet, legislature or competent authority approves.
  • 4. Implementation: departments and local bodies carry out the policy with money, staff and rules.
  • 5. Monitoring and evaluation: results are checked; audit and reviews are used.
  • 6. Revision or termination: the policy is changed or ends.

Policy actors: Parliament and State legislatures, the executive, the judiciary, planning and advisory bodies, political parties, pressure groups, the media and citizens.

Planning body: The Planning Commission (set up 1950) was replaced in January 2015 by NITI Aayog (National Institution for Transforming India). NITI Aayog is a think tank and policy adviser, and it promotes cooperative federalism, but it does not allot plan funds as the Planning Commission did.

Civil society and NGOs

Civil society is the space outside the State and the market where people act together by choice.

FormExample of role
NGO (non-governmental organisation)Service delivery, awareness, rights work
Self-help group (SHG)Savings and credit among women; strong in Andhra Pradesh
Community-based organisationLocal water, forest and school groups
Trade union and professional bodyProtect members' interests
Media and think tanksInform people, keep watch on government
Pressure groupPress the government on a cause

Role: NGOs fill gaps in health, education, livelihood and disaster relief. They also work as watchdogs and bring citizen voice. Government works with them through grants and partnership.

Limits and control: NGOs can face problems of weak transparency or dependence on donors. The Foreign Contribution (Regulation) Act, 2010 (FCRA) controls the use of foreign money by NGOs. Registration is under laws such as the Societies Registration Act and the Trusts Act.

In Andhra Pradesh the SHG movement, linked to women's thrift and bank credit, has been a prominent example of civil society and government working together for livelihoods and poverty reduction.

Social capital means trust and networks that help people work together. Public-private partnership (PPP) is a long-term contract in which the private sector builds or runs a public project and shares risk with the government.

Regulatory bodies

A regulator is a body that makes rules for a sector and watches that those rules are followed. Regulators are meant to be independent, expert and fair. They are created by laws.

BodySectorNote
Reserve Bank of India (RBI)Banking, money, currencyStarted 1935; nationalised 1949
SEBISecurities marketSet up 1988, statutory powers by an Act of 1992
TRAITelecomEstablished 1997
IRDAIInsuranceRegulates insurers
PFRDAPensionsRegulates pension funds
CCI (Competition Commission of India)Fair competitionUnder the Competition Act, 2002
CERCElectricityCentral Electricity Regulatory Commission; states have their own commissions
FSSAIFood safetyFood Safety and Standards Act, 2006
PNGRBPetroleum and natural gasRegulates downstream activities
NGTEnvironmentNational Green Tribunal, 2010

Because regulators decide matters between companies, consumers and the State, their decisions can usually be challenged before a tribunal or court. In consumer matters the Consumer Protection Act, 2019 created the Central Consumer Protection Authority (CCPA) and consumer commissions at district, state and national levels.

Tribunals

A tribunal is a quasi-judicial body to settle disputes in a special field, with speed and expertise.

  • Constitutional basis: Articles 323A (administrative tribunals) and 323B (tribunals for other subjects) were added by the 42nd Amendment (1976).
  • Central Administrative Tribunal (CAT): formed under the Administrative Tribunals Act, 1985, to settle service disputes of government employees. State Administrative Tribunals can also be formed.
  • Other examples: Income Tax Appellate Tribunal, Armed Forces Tribunal, Securities Appellate Tribunal, National Company Law Tribunal and the National Green Tribunal.
  • Tribunals Reforms Act, 2021: merged or removed some tribunals and changed rules of appointment and service of members.
  • Tribunals are still subject to review by the High Courts and the Supreme Court.

Anti-corruption institutions

  • Central Vigilance Commission (CVC): set up in 1964 on the Santhanam Committee's advice; made statutory in 2003.
  • Central Bureau of Investigation (CBI): investigating agency for major cases.
  • Lokpal and Lokayuktas Act, 2013: Lokpal at the Centre and Lokayuktas in States to inquire into corruption complaints against public servants. Andhra Pradesh has had a Lokayukta law since the 1980s.
  • Whistle Blowers Protection Act, 2014: protects persons who report corruption.

LPG reforms and their impact

In 1991, facing a serious balance of payments problem, India began the New Economic Policy.

  • Liberalisation: ended most licence and permit controls; reduced tariffs.
  • Privatisation: disinvestment and a reduced role of the public sector in many areas.
  • Globalisation: more trade, foreign investment and links with the world economy.

Positive impact: faster growth, more choice for consumers, growth of services and information technology, more foreign investment.

Concerns: rising inequality, pressure on small producers and farmers, job insecurity, and regional gaps.

Administrative impact: the State shifted from a controller to a facilitator and regulator. This gave rise to independent regulators, competition law, e-governance, and a stress on public-private partnership.

How regulators and civil society work together

A good regulator follows a clear process. It issues draft rules, takes comments from the public and industry, makes final rules, inspects and penalises those who break them, and publishes reasons for its orders. This is called regulatory transparency. Regulators also face the risk of regulatory capture, which means that the body starts to serve the interests of the industry it should watch instead of the public. Independent appointment, fixed terms and public reporting reduce this risk.

Civil society adds pressure from below. Consumer groups bring complaints to the regulator. Environmental groups appear before the National Green Tribunal. Public hearings, social audits and media reports bring facts to light. The State, in turn, supports civil society through grants, partnership in schemes and legal rights such as the Right to Information.

Delegated legislation and quasi-judicial functions: A regulator may make rules (quasi-legislative), inquire into complaints (quasi-executive) and decide disputes (quasi-judicial). Because it mixes these powers, its work must follow the principles of natural justice: a fair hearing and a reasoned order.

Role of the Comptroller and Auditor General (CAG): The CAG audits government accounts and reports to Parliament and State legislatures. This audit is a key tool of financial accountability and is used in evaluating policies and schemes.

Exam traps

  • 1. NITI Aayog vs Planning Commission: NITI replaced the Commission in 2015 and has no power to allot plan funds in the old way.
  • 2. SEBI 1988 vs 1992: established 1988, given statutory power in 1992.
  • 3. Articles 323A vs 323B: 323A for administrative tribunals; 323B for other subjects.
  • 4. CAT vs NGT: CAT handles service matters; NGT handles environment.
  • 5. CVC vs CBI: CVC supervises vigilance; CBI investigates.
  • 6. Lokpal vs Lokayukta: Lokpal is at the Centre; Lokayukta is for the State.
  • 7. FCRA: regulates foreign funds of NGOs, not domestic funds.
  • 8. Law vs policy: a policy is guidance; a law is a binding rule.

One-liners

  • 1. India began LPG reforms in 1991.
  • 2. NITI Aayog replaced the Planning Commission in 2015.
  • 3. The Competition Act is of 2002 and created the CCI.
  • 4. TRAI was set up in 1997.
  • 5. The Administrative Tribunals Act is of 1985.
  • 6. The 42nd Amendment inserted Articles 323A and 323B.
  • 7. The CVC became statutory in 2003.
  • 8. The Lokpal and Lokayuktas Act was passed in 2013.
  • 9. The Whistle Blowers Protection Act is of 2014.
  • 10. FCRA is of 2010.
  • 11. The Consumer Protection Act of 2019 created the CCPA.
  • 12. The National Green Tribunal was set up in 2010.

Practice questions

  1. The Planning Commission of India was replaced by which body in 2015?

    1. National Development Council
    2. NITI Aayog
    3. Finance Commission
    4. Inter-State Council
    Answer

    B. NITI Aayog

    NITI Aayog replaced the Planning Commission in January 2015.

  2. India began the New Economic Policy of liberalisation, privatisation and globalisation in which year?

    1. 1991
    2. 1985
    3. 1980
    4. 2000
    Answer

    A. 1991

    The LPG reforms began in 1991.

  3. Which regulator controls the securities market in India?

    1. TRAI
    2. IRDAI
    3. SEBI
    4. RBI
    Answer

    C. SEBI

    SEBI regulates the securities market.

  4. Which body regulates the telecom sector in India?

    1. TRAI
    2. CCI
    3. SEBI
    4. PFRDA
    Answer

    A. TRAI

    TRAI (1997) regulates telecom.

  5. The Competition Commission of India works under which Act?

    1. FEMA, 1999
    2. Consumer Protection Act, 2019
    3. MRTP Act, 1969
    4. Competition Act, 2002
    Answer

    D. Competition Act, 2002

    The CCI was set up under the Competition Act, 2002.

  6. Which Articles of the Constitution deal with tribunals?

    1. Articles 14 and 15
    2. Articles 323A and 323B
    3. Articles 280 and 281
    4. Articles 124 and 125
    Answer

    B. Articles 323A and 323B

    Articles 323A and 323B were added by the 42nd Amendment.

  7. The Central Administrative Tribunal (CAT) was set up under which Act?

    1. Civil Services Act, 1950
    2. Industrial Disputes Act, 1947
    3. Administrative Tribunals Act, 1985
    4. Lokpal Act, 2013
    Answer

    C. Administrative Tribunals Act, 1985

    CAT works under the Administrative Tribunals Act, 1985.

  8. Which tribunal was set up in 2010 to give quick justice in environmental matters?

    1. Securities Appellate Tribunal
    2. National Green Tribunal
    3. Armed Forces Tribunal
    4. Income Tax Appellate Tribunal
    Answer

    B. National Green Tribunal

    The NGT was established in 2010.

  9. The Lokpal and Lokayuktas Act was passed in which year?

    1. 2011
    2. 2005
    3. 2016
    4. 2013
    Answer

    D. 2013

    The Lokpal and Lokayuktas Act is of 2013.

  10. The Central Vigilance Commission was made statutory in which year?

    1. 1988
    2. 2014
    3. 2003
    4. 1964
    Answer

    C. 2003

    It was set up in 1964 and given statutory status in 2003.

  11. The CVC was set up in 1964 on the advice of which committee?

    1. Santhanam Committee
    2. Kothari Committee
    3. Sarkaria Commission
    4. Balwant Rai Mehta Committee
    Answer

    A. Santhanam Committee

    The Santhanam Committee recommended the CVC.

  12. Which Act controls the receipt of foreign money by NGOs in India?

    1. Foreign Contribution (Regulation) Act
    2. Companies Act
    3. RTI Act
    4. Societies Registration Act
    Answer

    A. Foreign Contribution (Regulation) Act

    FCRA, 2010 regulates foreign contribution to NGOs.

  13. The Whistle Blowers Protection Act was passed in which year?

    1. 2005
    2. 2010
    3. 2019
    4. 2014
    Answer

    D. 2014

    It was enacted in 2014.

  14. Which institution is the regulator of banking and currency in India?

    1. SEBI
    2. Reserve Bank of India
    3. NABARD only
    4. Finance Ministry
    Answer

    B. Reserve Bank of India

    The RBI regulates banks and manages currency.

  15. The Reserve Bank of India began working in which year?

    1. 1969
    2. 1949
    3. 1935
    4. 1947
    Answer

    C. 1935

    RBI began in 1935 and was nationalised in 1949.

  16. Which regulator deals with insurance in India?

    1. PFRDA
    2. IRDAI
    3. SEBI
    4. CERC
    Answer

    B. IRDAI

    IRDAI regulates insurance; PFRDA regulates pensions.

  17. Which body regulates food safety standards in India?

    1. CCI
    2. TRAI
    3. FSSAI
    4. PNGRB
    Answer

    C. FSSAI

    FSSAI works under the Food Safety and Standards Act, 2006.

  18. The Consumer Protection Act, 2019 created which authority?

    1. National Consumer Tribunal
    2. Consumer Fund Board
    3. Price Control Commission
    4. Central Consumer Protection Authority
    Answer

    D. Central Consumer Protection Authority

    The 2019 Act created the CCPA.

  19. Which stage comes first in the policy cycle?

    1. Agenda setting
    2. Evaluation
    3. Implementation
    4. Termination
    Answer

    A. Agenda setting

    A problem must first reach the agenda before formulation and later steps.

  20. A self-help group of women in a village saves money regularly and takes bank loans. Which kind of body is this?

    1. Political party
    2. Regulator
    3. Civil society organisation
    4. Tribunal
    Answer

    C. Civil society organisation

    SHGs are community-based civil society organisations.

  21. Which body gives expert and quick justice in a service dispute between a central government employee and the department?

    1. Lokpal
    2. Central Administrative Tribunal
    3. CCI
    4. NGT
    Answer

    B. Central Administrative Tribunal

    CAT handles service matters of government employees.

  22. A company complains about unfair business agreements that reduce market competition. Which body will it approach?

    1. CCI
    2. FSSAI
    3. PFRDA
    4. NGT
    Answer

    A. CCI

    The CCI acts against anti-competitive practices.

  23. Which statement about NITI Aayog is correct?

    1. It was set up in 1950
    2. It is a regulator of banks
    3. It allots plan funds like the old Commission
    4. It is a think tank and policy adviser
    Answer

    D. It is a think tank and policy adviser

    NITI Aayog is a think tank and adviser promoting cooperative federalism.

  24. Which of the following is an impact of LPG reforms on administration?

    1. More licences and quotas
    2. State became only a controller
    3. End of all public sector
    4. Rise of independent regulators
    Answer

    D. Rise of independent regulators

    Reforms moved the State towards a regulator role with bodies like SEBI and TRAI.

  25. Public-private partnership (PPP) means what?

    1. Long-term sharing of a public project between government and private sector
    2. Free grant to an NGO
    3. Transfer of state to the Centre
    4. Full takeover of a project by government
    Answer

    A. Long-term sharing of a public project between government and private sector

    PPP is a long-term contract sharing work and risk between government and private firms.

  26. SEBI was established in 1988 and given statutory powers through an Act in which year?

    1. 1996
    2. 1992
    3. 2002
    4. 1986
    Answer

    B. 1992

    SEBI received statutory powers in 1992.

  27. Which body supervises vigilance in central government departments, while another agency investigates crimes?

    1. NGT
    2. CBI
    3. CVC
    4. Lokpal
    Answer

    C. CVC

    The CVC supervises vigilance; the CBI investigates.

  28. Which of the following protects persons who expose corruption?

    1. Companies Act
    2. Whistle Blowers Protection Act
    3. Competition Act
    4. FCRA
    Answer

    B. Whistle Blowers Protection Act

    It protects whistle-blowers from harm.

  29. In public policy, the step where results are reviewed using audit and reports is called what?

    1. Adoption
    2. Formulation
    3. Agenda setting
    4. Monitoring and evaluation
    Answer

    D. Monitoring and evaluation

    Checking results is monitoring and evaluation.

  30. Consider the statements. 1. Articles 323A and 323B were added by the 42nd Amendment. 2. The CAT handles service matters. Which is/are correct?

    1. 1 only
    2. Both 1 and 2
    3. 2 only
    4. Neither
    Answer

    B. Both 1 and 2

    Both are correct.

  31. Consider the statements. 1. FCRA controls foreign contributions to NGOs. 2. FCRA controls domestic donations to political parties. Which is/are correct?

    1. Both 1 and 2
    2. 2 only
    3. 1 only
    4. Neither
    Answer

    C. 1 only

    FCRA covers foreign contribution; statement 2 is not its aim.

  32. Consider the statements. 1. NITI Aayog replaced the Planning Commission. 2. NITI Aayog works as a think tank. Which is/are correct?

    1. 1 only
    2. 2 only
    3. Neither
    4. Both 1 and 2
    Answer

    D. Both 1 and 2

    Both are correct.

  33. Consider the statements. 1. A law is a binding rule passed by the legislature. 2. A policy is only a guide to action and may use laws and schemes. Which is/are correct?

    1. Both 1 and 2
    2. 1 only
    3. 2 only
    4. Neither
    Answer

    A. Both 1 and 2

    Both are correct.

  34. Consider the statements. 1. TRAI regulates insurance. 2. IRDAI regulates telecom. Which is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither
    Answer

    D. Neither

    TRAI regulates telecom and IRDAI regulates insurance, so both are wrong.

  35. Consider the statements. 1. Lokpal is a body at the Centre. 2. Lokayukta is for a State. Which is/are correct?

    1. 1 only
    2. Both 1 and 2
    3. 2 only
    4. Neither
    Answer

    B. Both 1 and 2

    Both are correct under the 2013 Act and state laws.

  36. Consider the statements. 1. LPG reforms started in 1991. 2. They reduced licence controls and increased the role of the market. Which is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither
    Answer

    C. Both 1 and 2

    Both are correct.

  37. Consider the statements. 1. Tribunals are free from review by High Courts and the Supreme Court. 2. Tribunals give expert and quick justice in special fields. Which is/are correct?

    1. 1 only
    2. Both 1 and 2
    3. Neither
    4. 2 only
    Answer

    D. 2 only

    Tribunal decisions remain open to judicial review, so only statement 2 is correct.

  38. Consider the statements. 1. CVC was set up in 1964. 2. CVC was made statutory in 2003. Which is/are correct?

    1. Both 1 and 2
    2. 1 only
    3. 2 only
    4. Neither
    Answer

    A. Both 1 and 2

    Both are correct.

  39. Match the regulator with its sector: 1. SEBI - securities; 2. TRAI - telecom; 3. IRDAI - food safety. Which pairs are correct?

    1. 1 and 3 only
    2. 1 and 2 only
    3. 2 and 3 only
    4. 1, 2 and 3
    Answer

    B. 1 and 2 only

    IRDAI regulates insurance, not food safety.

  40. Match the body with its role: 1. CVC - vigilance; 2. CAT - service disputes; 3. NGT - environment. Which pairs are correct?

    1. 1 and 2 only
    2. 2 and 3 only
    3. 1, 2 and 3
    4. 1 and 3 only
    Answer

    C. 1, 2 and 3

    All three pairs are correct.

  41. Match the law with its year: 1. Competition Act - 2002; 2. Administrative Tribunals Act - 1985; 3. FCRA - 2010. Which pairs are correct?

    1. 1 and 2 only
    2. 2 and 3 only
    3. 1 and 3 only
    4. 1, 2 and 3
    Answer

    D. 1, 2 and 3

    All three pairs are correct.

  42. Match the item with its meaning: 1. Liberalisation - fewer licence controls; 2. Privatisation - reduced public sector role; 3. Globalisation - closing of trade borders. Which pairs are correct?

    1. 1 and 2 only
    2. 1 and 3 only
    3. 2 and 3 only
    4. 1, 2 and 3
    Answer

    A. 1 and 2 only

    Globalisation means more trade and links, not closing borders.

  43. Match the stage with its meaning: 1. Formulation - options studied; 2. Adoption - approval by competent authority; 3. Implementation - policy ended. Which pairs are correct?

    1. 2 and 3 only
    2. 1 and 2 only
    3. 1 and 3 only
    4. 1, 2 and 3
    Answer

    B. 1 and 2 only

    Implementation is carrying out the policy; ending the policy is termination.

  44. Which of the following is an example of a civil society organisation working as a watchdog on government?

    1. A tax office
    2. An election commission
    3. A citizens' group monitoring public services
    4. A police station
    Answer

    C. A citizens' group monitoring public services

    Citizen groups monitoring services act as civil society watchdogs.

  45. Which of the following is a concern raised about the LPG reforms?

    1. Rising inequality and pressure on small producers
    2. Closed trade with the world
    3. Lower consumer choice
    4. Reduced foreign investment
    Answer

    A. Rising inequality and pressure on small producers

    Critics point to inequality and pressure on small producers and farmers.

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