As we debate the future of the Indian economy, the issue of regulation has emerged consistently as a crucial fault line. How does India design regulatory systems in ways that are effective, constrains capital where needed, but at the same time builds markets, enables the unleashing of animal spirits, and protects labour and citizens?

These are critical roles the state is meant to play, but given India’s complex regulatory system, it has been argued that the only way ahead for India is to rid ourselves of the regulatory cholesterol to unleash animal spirits and build the Indian economy. In such a situation, what role should the state play in building regulatory institutions and mediating the relationship between capital and labour?

In this episode, Yamini Aiyar, President & Chief Executive of CPR, speaks with Dr KP Krishnan, Professor at the National Council of Applied Economic Research and former IAS officer.

Krishnan sheds light on the difference between “good” and “bad” regulatory cholesterol, shares examples of positive financial regulation by the state, and calls for participatory processes in the design of regulation.

For more information on the centre’s work, follow CPR on Twitter @CPR_India or visit You can read more on TeamLease’s work on India’s compliance regime and regulatory cholesterol here and here.