When Regulators Fail, They Regulate the Fix Instead of the Failure
The India Commentary view
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By Our Editorial Team
First publised on 2026-07-10 01:14:41
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The India Commentary view
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A pattern has become visible across India's regulatory landscape. An agency fails to solve a consumer problem for years. A private platform builds a tool that works. Once that tool becomes popular, the regulator does not ask why its own systems failed first. It moves instead to control the platform that succeeded where it did not.
Truecaller is the clearest example. TRAI has reportedly sought powers to regulate caller-ID apps because Truecaller's "Frequently Blocked" badge shows consumers routinely block calls from numbers verified under the 140 and 1600 series. TRAI's discomfort is understandable but misplaced. Truecaller did not create the spam-call problem. It became indispensable because India's telecom regulator spent years failing to curb it, despite distributed ledger technology, telemarketer registration and repeated anti-spam circulars. The badge is not an attack on verification. It is a record of how Indians actually experience calls TRAI itself certified as legitimate. Instead of asking why unsolicited calls remain a daily nuisance under its own watch, TRAI wants authority over the app that finally let consumers filter them.
The securities market offers a parallel story, though it deserves a more careful reading. SEBI's December 2025 enforcement action against finfluencer Avadhut Sathe, which impounded over Rs 546 crore, targeted genuine fraud. An operation dressed up as education but structured to sell unregistered advisory services deserved exactly this scrutiny. But SEBI's January 2025 circular did more than target fraud. It restricted all financial educators, fraudulent or not, from using stock price data less than three months old, disabling real-time market commentary as a teaching tool. The rule does not distinguish a pump-and-dump scamster from a genuine educator explaining yesterday's price move. Both are treated as suspects.
Why did finfluencers become powerful enough to require this blanket rule in the first place? India's financial literacy rate hovers around 27 percent. SEBI's own investor education mandate exists to close that gap. It did not close it fast enough, and into that space walked thousands of creators who explained mutual funds and trading basics more effectively than any government helpline. Some were frauds. Many were not. SEBI's fraud enforcement is legitimate. Its blanket restriction on live data, applied equally to the honest and the dishonest, punishes the messenger for a literacy gap the regulator left open.
The common thread is not that regulation is unnecessary. It is that regulators reach for control over a symptom instead of accountability for the cause. Neither TRAI nor SEBI asks the harder question of itself: why did consumers need a private workaround at all.
A regulator that has done its job does not need to suppress evidence of its own gaps. Genuine fraud deserves the full force of regulatory action. But a platform that reflects what consumers already feel, or teaches what they were never taught, is not the source of the problem. It is a mirror. Breaking the mirror does not fix what it shows.
TRAI's priority should be reducing spam at the network level, not policing the app that flags it. SEBI's priority should be expanding investor education fast enough that fraudulent finfluencers have no audience left, not restricting honest educators alongside dishonest ones. Until that inward turn happens, regulating the workaround will look like managing the symptom rather than curing the disease.
