The Banyan Shades

Broadening the reach and scope of the EPA

Government has plans to rework environment related acts including Environment Protection Act, Air (Prevention and Control of Pollution Act), 1981 and The Water Act, 1974. The mode of governance is taking a turn towards market based approaches from a purely regulatory one. The government is also contemplating a new task force dedicated towards Environmental protection. The new acts will furnish regulators with responsibilities like deciding the extent of offense, penalties, and further requisite action. 

Intent of the current proposed amendment: To give a longer leash to businesses, entrepreneurs, and citizens, by replacing penal provisions with fines. This amendment will increase the registration of cases and improve the ease of doing business as it will remove criminal stigmatization of the offenses. 

The fines, however, have been kept exorbitant and non-compliance criminalized to ensure deterrence. The proposed amendments, which were arrived at after consultation and deliberation with stakeholders, lack an impact assessment of the regulations which is fundamental to ensuring they achieve desired results and do not have any unintended adverse effects.

We introduce here the notion of Regulatory Impact assessment (RIA), which has been recommended and is being followed by various developed, and developing countries, and organizations including but not limited to the USA, numerous European countries and OECD. “The primary objective of RIA is to ensure that the regulation governments develop and implement is of high quality, since the costs to society of poor quality regulation are substantial. RIA systems are fundamental to initiatives pursuing a comprehensive improvement in regulatory practices and performance.”

RIA is a methodological approach to finding all possible feasible alternatives to achieve objectives that regulations, rules and laws intend to realize. It systematically identifies and analyses the effects of the various possible regulatory methods using consistent analytics combined with public consultation to arrive at the most effective and efficient decision to be made. This makes the process scientific and reduces the risk of government policies falling prey to human error or worse yet, whims fancies and misdirected zeal. 

RIA will institutionalize research and analysis of 2nd and 3rd order effects of the proposed regulatory system, which often gets overlooked in the case of India. An example of this oversight are some of the adverse effects of the otherwise much acclaimed Green Revolution. The process ensures achievement of sustainable development.

RIAs are known to cause improvements in regulations. The framework also helps in terms of compliance. International organisations like OECD and the World Bank have recommended the design of RIA guidelines. RIA is essentially to help regulatory bodies make better decisions. Hence, in countries like the UK,  the government “has constituted a Regulatory Policy Committee (RPC) which is the government’s independent advisory body to provide scrutiny of the evidence and analysis supporting regulatory changes affecting businesses.” Hence, a task force that collects evidence and verifies it can complement the efforts of the Regulatory bodies. 

OECD provides a formula to quantify the regulatory costs as follows:

The regulators may face a problem in deciding the penalties for a particular violation. When the violation has been committed by an industry, there exists a formula that can be used to quantify the cost and impose an appropriate penalty that falls between the bracket of 5 lakhs to 5 crores. 

Once we obtain a regulatory cost of undoing the damage that has been caused by breach of environmental laws, financial responsibility can be allocated. 

The method is thus:

  1. Obtain estimates of the amount of a particular identified cost for a particular business. 
  2. Add this to the number of businesses to be affected by that regulation.
  3. Estimate the hourly cost of completing the task. 

By multiplying time taken, hourly cost, firms affected, and frequency of tasks, we can arrive at a regulatory cost. 

Estimated regulatory costs = Hourly cost * Time taken to achieve a regulatory activity * frequency of tasks * Firms affected. 

This cost can be further used in deciding the penalties. 

Impact analysis for the alternative and the proposed amendments:

How are the people affected?

In non-monetary regulation: 


  • The communities are empowered. 
  • This practice can be self-regulatory. 
  • There would be greater awareness. 
  • The bureaucratic red-tapism would end. 
  • The nature of pro bono work can be research. 
  • Reduce opportunity for corruption.


  • Nature of community service will vary. Difficulty with standardization.

In proposed amendments:


  • Decriminialisation increases registration of cases.
  • Increases government revenue.
  • Increases compliance, acts as an effective deterrent.


  • Low local involvement.
  • Does not act towards empowerment.
  • Government role is still dominant.
  • Ill-effects of red-tapism.
  • Opportunity for corruption.

Benefit of recommended non-monetary regulations for government policies:

The government can ensure that R and D projects are undertaken by private industries and hence achieve the government’s objective of private investment in R&D. 


Reporting of historical data suggests that the criminalization of environmental offenses was initiated in the ‘70s as a consequence of the global awareness of environmental concerns. The data analysis conducted shows that the reporting under all environmental acts are incredibly low. This makes it difficult to track violations and compliance. Hence, the need for alternate approaches to criminalization. Regulatory Impact Assessment will provide the regulators with a robust formula and guideline to carry out tasks delegated to them. Moreover, citizens will be empowered on the general set of rules with respect to Environmental governance. The objectives of the government policies will be better met and its impact be more comprehensive and wide with minimum collateral damages. An example that can be followed is the recent methodology adopted by the IT Ministry to study the impacts of its recent IT regulations.

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