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Deregulation Commission to Streamline Regulatory Framework
Context:
In her Budget speech, the Union Finance Minister emphasised the government’s commitment to ensuring that regulations evolve in tandem with technological advancements and global policy trends.
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- As part of this initiative, a high-level committee is set to be established to review all non-financial sector regulations, certifications, licenses, and permissions.
- This committee is expected to present its recommendations within a year, aiming to foster trust-based economic governance and improve the ease of doing business, particularly in inspections and compliance procedures.
- The Prime Minister further reinforced this commitment by announcing plans to establish a Deregulation Commission.
- This move underscores the government’s long-term strategy to simplify regulatory frameworks, signaling a serious intent to enhance economic efficiency.
Timely Initiative
- The proposal for a Deregulation Commission comes at a crucial juncture, as India is on the trajectory to becoming the world’s third-largest economy.
- The long-term goal of Viksit Bharat (Developed India) is both ambitious and attainable, provided that foundational reforms are implemented today.
- With over a thousand regulations in place, the Commission will have an extensive task ahead. Here are some key areas for consideration:
- Inclusive Reform Process: Regulatory reforms must involve various stakeholders, including public representatives, ensuring that policies enhance overall community welfare.
- Priority on Concurrent List Regulations: Given India’s federal structure, regulations falling under the Concurrent List require urgent attention due to their broad impact and complexity.
- State-Level Engagement: States play a pivotal role in both enacting and enforcing regulations. Their inclusion in the Commission is essential to ensure comprehensive and effective reforms.
- Focus on Factors of Production: Reforms should prioritise regulations related to land, labor, capital, and entrepreneurship, as these directly impact economic growth and technological innovation.
- Dedicated Reforms Officers: Agencies implementing regulatory changes should appoint reforms officers to oversee implementation, gather stakeholder feedback, and drive continuous improvements.
- Shifting to Quality and Safety Standards: In certain sectors, regulations could be replaced with stringent quality and safety standards, reducing bureaucratic hurdles while ensuring compliance.
- Repealing Obsolete Regulations: The Commission should identify outdated regulations with minimal practical utility and work towards their repeal.
- Encouraging Self-Regulation: In certain areas, self-regulatory mechanisms, such as industry codes of conduct, could replace direct government intervention, fostering a trust-based regulatory environment.
- Relaxing Licensing Requirements: Sectors open to 100% Foreign Direct Investment (FDI) could transition from pre-market approvals to post-market notifications, provided quality and safety standards are met.
- Leveraging Judicial Precedents: Where feasible, judicial rulings that amend or repeal regulations should be adopted instead of enacting new laws unless absolutely necessary.
- Streamlining Regulatory Agencies: The Commission should also explore opportunities to consolidate regulatory agencies, eliminating redundancies and reducing government expenditure.
A Structured Approach
The Deregulation Commission should establish a framework for enacting new regulations, considering factors such as:
- Encouraging Technological Advancement: Regulations should facilitate innovation while addressing ethical concerns, intellectual property rights, and data privacy. For instance, AI regulation must balance promotion with safeguards.
- Market and Societal Impact: New regulations should be assessed based on their impact on stakeholders, market conditions, and the government’s capacity for enforcement.
- Experience from Existing Regulations: Lessons from current regulations should inform the decision to deregulate or transition to self-regulation.
- Minimising Regulatory Overlap: Any potential overlap with existing regulations should be carefully evaluated to prevent redundancy.
- Regular Review Mechanism: Newly enacted regulations should be reviewed every three to five years to ensure they remain relevant and effective. Additionally, for every new regulation introduced, at least two outdated ones should be repealed to prevent regulatory overload.
For regulatory reforms to be truly impactful, they must transform the relationship between regulators and the regulated. The focus should shift from strict enforcement to facilitation, ensuring compliance through education, awareness, and capacity building.
