ABSTRACT
Economic reforms have led to the creation of independent regulatory agencies (IRAs) in India. The relevance of an IRA rests on the rationale of providing a credible commitment to private investors who are otherwise reluctant to invest in public services, like electricity or water. The question is whether such a regulatory institution and its conventional privatization-centric rationale are relevant to the water sector in developing countries like India.
The case of the design and implementation of an IRA in the water sector in India shows that the relevance of IRAs in the water sector is emerging, not for privatization, but to provide a credible commitment to social principles. This reflects the social realities of a highly contested resource in an under developed country. However, it may lead to a dissonance in institutional design. While addressing this problem, the chapter attempts to go to the root of the credible commitment rationale to argue for an alternative equity-centric credible commitment rationale.
