Deregulation

Reviewed by Sweta | Updated on Aug 27, 2020

Introduction

Deregulation is the elimination or removal of government controls over a particular industry or sector. Deregulation opens up the industry to more players and makes it more competitive.

Deregulation opens investment opportunities and promotes economic growth. Regulations may be replaced with reporting and compliance requirements to monitor the activities of the industry.

Understanding Deregulation

There are people advocating for deregulation as well as people who desire regulations in a market. These two proponents have shifted market conditions and situations. The financial sector is one of the most regulated and scrutinised sectors in the industry.

People in favour of deregulation justify on the grounds freeing up the market for creating more investment opportunities and stimulating economic growth. However, there are people who argue in favour of regulations to facilitate transparency in financial dealings and avoid a financial crisis.

Regulatory Clearances in Different Sectors

Regulatory clearances are required to carry on any business activities. Certain sectors are completely government-controlled to ensure the supply of goods and services at reasonable prices, such as railway services.

Financial markets and banking services are regulated to protect the interests of investors and customers. Deregulation improves the quality of the goods and services for the end consumers.

The US has established the Securities and Exchange Commission to regulate and streamline the financial securities market. Similarly, in India, the Securities and Exchange Board of India (SEBI) regulates financial markets.