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The economic reforms sweeping across developing countries are changing the social fabric of traditional societies. Reforms that were once focused on development projects and programmes (such as building of dams) are now aiming at institutional restructuring through changes in the policy and legal frameworks in different sectors. These sectoral institutional reforms are moving 'policy' centre-stage in politics. This can be seen as the beginning of the creation of a distinct political sphere, woven around issues of public policy as against the issues of identity and interests determined by social and personal relations. This will eventually facilitate the incorporation of policy formulation tools in formal policy processes. However, the legacy of interest-based politics in developing countries continues to have an influence on the design and use of such tools. Transplantation of models from industrialized countries without cognizance of this legacy leads to the capture of policy venues and of the process of tool use by the dominant sections of the society. The case of tool use in one particular government-led venue points towards such a capture.

The analysis of tool use in one government-led venue has shown that vested interests enjoy a high level of influence. A sophisticated and precise tool like CBA is easily manipulated in such a venue. Opening up the process through the use of participatory tools has provided some space for more critical analysis of policy options. It was possible to bring equity and other social considerations in the public discourse through such participatory tools. But due to the domination of political leaders and associated vested interests, the inclusion of social principles remains partial and marred by obscurity and confusion created around its operationalization. The consultation process is dominated by the political leaders through the mechanism of 'stage-managed events'. When it comes to the implementation of the policy, the obscurity created around the social principles comes as a handy tool for the political leaders to completely bypass the policy provisions related to these principles. Thus, tool use under a government-led venue remains ineffective in countering vested interests.

The model of the independent regulatory authority (IRA) has its origin in developed countries. Transplantation of this model of independent regulation to developing countries has given rise to a new venue for tool use. The focus of tool use by IRAs in developed countries has been to ensure techno-economic rationality in policy decisions. The IRA is supposed to achieve this by keeping an arm's-length distance from the political executive. In the case of developing countries, social policy considerations are so critical that an IRA cannot remain focused purely on techno-economic rationality. The case of tool use under this new policy venue shows the potential of independent regulatory processes in countering vested interests and bringing in social policy considerations.

Tool use in an IRA-led venue has shown higher potential in countering vested interests. Unlike the 'stage-managed events' in the government-led venue, the IRA was able to provide a neutral institutional location for the sharing of policy options and their assessment. This provided an important opportunity for civil society actors to form a coalition and represent the poor and marginalized sections in the policy formulation process. The autonomous nature of the venue ensured that the policy options presented by these social actors are heard and incorporated in the official policy assessment process. This provided the much needed space for presenting evidence in favour of a pro-poor approach to tariff policy. The tool use under the autonomous policy formulation venue was actually able to counter the dominant interests linked to the reduction of cross-subsidy. This is evident from the fact that the policy option of cross-subsidy reduction was abandoned and on top of this, new concessions in water tariffs were awarded to various disadvantaged sections of the society.

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