REGULATORY SYSTEMS IN INDIA

India incorporated environmental protection measures in the Constitution to implement decisions taken at International Conventions and Conferences. In addition, the Bhopal Gas Tragedy necessitated the Government of India to enact a comprehensive environmental legislation to mitigate externalities. On the basis of these, the Indian Parliament enacted the Environmental Protection Act, 1986. This is an umbrella legislation that consolidated the provisions of the Water Act of 1974 and the Air Act of 1981. Within the framework of the legislation(s), India established Pollution Control Boards (PCBs) in order to prevent, control, and abate environmental pollution. The focus of this article is to evaluate the functioning of PCBs (in particular, the State Pollution Control Board of Andhra Pradesh, and the Central Pollution Control Board, New Delhi) in relation to the prevention of externalities. The analysis of the paper is based on primary as well as secondary data. The data has been collected from published and un-published records. Based on the review of these documents, a questionnaire was prepared to obtain the opinion of the officials of PCBs on the functioning of the Boards. The primary emphasis was on the degree to which the objective of improving environmental quality in India has been fulfilled. The inferences drawn from the empirical analysis were then critically evaluated in the light of the theory of regulatory system. This provides insights into the effectiveness of providing incentives to polluters to take precautionary measures. The study reveals that the regulatory system is unable to improve the environmental quality effectively and efficiently because of an increase in its responsibilities, and the absence of deterrence mechanisms within the PCBs for imposing fines against rogue industries.