A talk by Dr. Phillip Krause, good regulatory orders, GIFT City, carbon markets and BUDS Act | The TrustBridge Newsletter | Issue 17
From transactional to policy ministries of finance | Writing good regulatory orders | Understanding GIFT City | Carbon markets and carbon taxes in India | Cost-benefit analysis of the BUDS Act
This is TrustBridge’s monthly newsletter. TrustBridge seeks to improve India’s business environment by improving the rule of law. In this monthly newsletter, we bring you the work done by the TrustBridge Team in the public space and offer insights into future work.
Upcoming Event
TrustBridge will host a talk by Dr. Phillip Krause: “From transactional to policy ministries of finance” on 7 February 2025 from 4 – 5.30 p.m. at its offices in New Delhi.
An abstract of the the talk is below:
What distinguishes finance ministries from one another? This is not a trivial question for governments amidst increasing demands for finance ministries to become involved in a wide range of urgent crises and long-term challenges. What variation in the function, form and inner workings of finance ministries might shape their ability to do so? There are two ideal types of finance ministries, transactional or policy ministries. At the turn of the 20th century, all finance ministries were transactional ministries, meaning that management attention and the bulk of their staff were committed to processing or overseeing transactional work. Over time, some ministries shifted to a policy focus. This involved greatly increasing policy staff, while automating, simplifying, and delegating transactional tasks. Such a transition can take decades and depends on having a credible budget and stable macroeconomic environment.
Its position on the transactions-policy continuum shapes how a finance ministry interacts with its environment and responds to new challenges. It needs to be properly understood when thinking about fiscal and budgetary policy.
The talk will be held in person at the TrustBridge offices, New Delhi. If you would like to attend the talk, please RSVP: info@trustbridge.in
Past Events
Bhavin Patel presented on ‘A guide to writing good regulatory orders’ at the Forum of Indian Regulators' for their certificate course on regulatory governance on January 8, 2025.
Renuka Sane participated in a panel discussion on ‘Innovating Finance for a $10 Trillion Economy - Understanding GIFT City: India’s Singapore’ at the Pune Public Policy Festival on January 10, 2025.
Op-eds
Renuka Sane wrote two articles for The Print:
‘Carbon markets won’t work in India. There’s one alternative to explore’, on December 18, 2024.
Both carbon markets and carbon taxes present inherent challenges. Carbon markets often face issues of complexity in design, enforcement, and susceptibility to price volatility, which can undermine their efficacy. For example, if we have to set targets then we need to answer questions like which sectors should have what targets, and how these should be allocated.
Carbon taxes, while simpler, encounter political resistance and risk disproportionate economic burdens if not carefully structured. India should make the choice not based on which system is theoretically superior but on whether a framework aligns best with its economic structure, governance capabilities and political constraints.
‘India’s BUDS Act needs urgent review. Flaws show govt didn’t do cost-benefit analysis in 2019’, on January 8, 2025.
Further, unchecked state power has economic and social consequences. Businesses that operate genuine deposit schemes may feel threatened by the possibility of sudden interventions by authorities on the basis of information that may be false. Citizens may begin to perceive the law not as an instrument to help them, but as an instrument of coercion. Unchecked power, however well-intentioned, carries the seeds of its own excess. The sidelining of judicial oversight is to risk undermining the legitimacy of the law itself.
It is not clear whether the BUDS Act, passed in 2019, went through a rigorous process of cost-benefit analysis and stakeholder consultation. It is likely that it didn’t because these gaps would have been recognised in the process. Further, any legislation should be reviewed every few years to understand if it has had the intended impact, and to measure unintended consequences that may have arisen. The BUDS Act should go through such a review.