Under principle based regulation, a broad set of principles or guidelines are given, while under rule based regulatory set up, clear rules are set up.
The objectives to be achieved are the same, but in case of principle based regulation, the ‘how’ is left to the entity being regulated while in case of rule based regulation, the ‘how’ is decided by the regulator itself.
For example:
‘Don’t drink & drive and Drive responsibly’ – This is just a guideline or a principle. What exactly is irresponsible driving is left open for interpretation. This is a princple based approach.
‘Drinking beyond 10 ml of alcohol and driving is an offence punishable by 10 years in jail’ – This rule clearly signifies the limits beyond which a driver will be penalised. This is a rule based regulation or approach.
In both the cases, the government wants people to drive responsibly to avoid any accidents, but the approach taken to achieve that objective is different.
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