N4S

This article explores how India is shifting towards evidence-based policymaking (EBPM). UPSC often asks such topics by linking them to broader governance issues -like the 2018 GS2 question on policy contradictions. Where aspirants usually falter is in reducing these topics to mere institutional listing without engaging with the underlying structural reforms – like regular rule reviews, digital governance platforms, or the need for a unified regulation-making law. This article helps bridge that gap. It explains key changes like Mandatory Public Consultation and Economic Impact Analysis in a simple, relatable way. A standout section is “EBPM across Schemes”, which gives practical examples – from JAM to Swachh Bharat to NEP – that can be used in GS2, GS3, Ethics, and Essay papers. It also connects Indian reforms with global practices (like US OIRA and EU’s ex-post review), helping aspirants frame comparative arguments. Most importantly, the article makes a data-heavy, abstract topic feel human and real – something aspirants often miss. 

PYQ ANCHORING

GS 2 :  Policy contradictions among various competing sectors and stakeholders have resulted in inadequate ‘protection and prevention of degradation’ to environment. “ Comment with relevant illustration. [2018]

MICROTHEMES: Structural Reforms & actions

For the first time, India’s top financial regulators – the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) – have laid down clear steps for how they’ll make, update, and review regulations. This is a big shift toward more transparent, data-backed, and accountable governance.

Changes made by RBI and SEBI

1. Mandatory Public Consultation

Before any new rule is finalised, there’s now a 21-day window where the public can give feedback.
Example: If SEBI plans to change investment rules, investors, companies, or citizens can send suggestions.

2. Clear Objectives and Impact Analysis

• RBI must explain the possible economic impact of its proposed regulations.
• SEBI must clearly state the intent and purpose behind a rule.
  Example: Before regulating digital lending, RBI must study how it would impact consumers and lending companies.

3. Regular Review of Old Rules

Both regulators will now revisit older regulations to see if they still make sense in today’s context.
Example: SEBI might reassess mutual fund norms to match current market realities.

Learnings from USA and EU

Recent trend of reforms in India

In recent times, India’s financial sector has shown a clear shift toward evidence-based policymaking, with regulators increasingly relying on data, public feedback, and impact assessments to frame and refine policies. This shift is marked by a move away from purely top-down decision-making toward a more transparent, consultative, and analytical approach. Key developments include:

Evidence-Based Policymaking (EBPM)

Evidence-Based Policymaking refers to the systematic use of data, research, and empirical analysis to inform and guide policy decisions. Rather than relying on ideology, intuition, or political expediency, EBPM insists that policies must be:

• Grounded in verifiable evidence,
• Evaluated through cost-benefit and impact assessments,
• Designed to address real problems, not perceived ones.

Academic Roots of EBPM

Core Philosophy Behind EBPM

EBPM across Schemes

1. Aspirational Districts Programme (ADP): Launched by NITI Aayog in 2018.
Evidence Used: Real-time data from 112 underdeveloped districts on health, education, infrastructure, etc.
Tools: Use of Champions of Change Dashboard, ranking districts on performance metrics.
Impact: Led to targeted intervention and measurable improvement in outcomes like institutional deliveries and school attendance.

2. JAM Trinity in DBT (Jan Dhan, Aadhaar, Mobile): Reform of subsidy delivery through Direct Benefit Transfers (DBT).
Evidence Used: Leakages in PDS, LPG, and MNREGA identified through pilot projects and CAG audits.
Outcome: Over ₹2.2 lakh crore reportedly saved in leakage (as per govt reports), while increasing inclusion.

 3. National Education Policy (NEP) 2020: Revamp of India’s education system.
Evidence Used: Based on over 2 lakh suggestions, committee recommendations, and academic studies on learning outcomes and dropout rates.
Key Shift: Emphasis on foundational literacy, flexible curriculum, and local language teaching.

4. Swachh Bharat Mission – Gramin: Nationwide sanitation campaign to end open defecation.
Evidence Used: Baseline surveys in 2013 and independent impact assessments by WaterAid, UNICEF, etc.
Policy Change: Shift from toilet construction targets to behavioural change campaigns.

6. Farm Laws and Repeal :Three farm laws were introduced to reform agricultural marketing.
Gap in EBPM:

• Limited public consultation,
• Lack of pilot testing,
• Absence of broad stakeholder consensus, especially with farmer unions.
  Outcome: Widespread protests, followed by repeal.
  Lesson: Highlights the consequences of ignoring evidence and consensus-building in policymaking.

7. COVID-19 Vaccination Strategy (CoWIN Platform): Nation-wide vaccine rollout.
Evidence Used: Data on supply chains, real-time coverage, and vulnerable groups.
Tools: CoWIN dashboard, GPS-linked vaccine monitoring, demographic analytics.

Challenges in EBPM

Way Forward

1. National Evidence Ecosystem:
   Create an independent Evidence Advisory Body under NITI Aayog to guide ministries and coordinate evaluations.
2. Data Infrastructure:
   Develop a unified national data portal with real-time, disaggregated, and publicly accessible datasets.
3. Impact Evaluation:
   Make pilot testing and independent impact evaluation mandatory for all major government schemes.
4. Local Government Capacity:
   Deploy trained data and policy officers at the district level to support evidence-based planning.
5. Policy-Academia Linkages:
   Fund and formalize partnerships between ministries and research institutions for evidence generation.
6. Transparency & Feedback:
   Mandate public release of evaluation reports and integrate citizen feedback into policy design.

#BACK2BASICS: Financial Regulatory Ecosystem

It refers to the network of institutions, laws, and mechanisms that govern financial markets and institutions – ensuring stability, protecting consumers, promoting competition, and preventing fraud or misuse.

Core Financial Regulators in India

Supporting Institutions

Key Laws Governing Financial Regulation

Challenges in the Ecosystem

1. Jurisdiction Overlap:
   Multiple regulators oversee similar products, causing confusion. (e.g., SEBI-IRDAI over ULIPs)
2. Regulatory Arbitrage:
   Firms choose lenient regulators to bypass strict norms. (e.g., NBFCs vs banks)
3. Poor Coordination in New Areas:
   Fragmented oversight in fintech, crypto, AI. (e.g., RBI vs MeitY on digital lending)
4. Gaps in Climate Finance Regulation:
   No unified framework for green bonds or ESG disclosures. (e.g., SEBI vs RBI roles)
5. Weak Protection in Informal Sector:
   Unregulated products expose consumers to risk. (e.g., chit funds, informal loans)
6. Slow Regulatory Adaptation:
   Laws lag behind market innovation. (e.g., delayed crypto regulation)

India’s financial regulatory ecosystem is broad, multi-layered, and evolving — aiming to balance stability, transparency, and innovation. As the financial world changes rapidly, India needs stronger coordination, more transparent rule-making, and a common legal and institutional framework to stay resilient and globally competitive.

SMASH MAINS MOCK DROP

In the context of evolving regulatory governance in India, evaluate the role of evidence-based policymaking (EBPM) in ensuring transparency, accountability, and public trust.