Within the framework of the Environmental Protection Act, 1986, that consolidated the provisions of the Water Act of 1974 and the Air Act of 1981, India established pollution control boards to prevent, control and abate environmental pollution. This paper examines the functioning of PCBs, in particular the Central Pollution Control Board and Andhra Pradesh Pollution Control Board to see if they have been able to prevent environmental externalities in the process of economic development. It finds that the agencies have been unable to improve environmental quality effectively because of an increase in their responsibilities, absence of deterrence mechanisms and inadequate human and financial resources.