3 days ago
Steps taken by states to ease regulatory and compliance burden are welcome
India's byzantine regulatory apparatus takes a heavy toll on its growth story. The myriad regulations that exist at all levels of government — central, state and municipal — impose a heavy compliance burden on businesses, leading to higher costs and reduced productivity, and hindering entrepreneurship and investments, both domestic and foreign, in the country. Over the years, governments at both the central and state level have taken steps to improve the ease of doing business in the economy. The continuing steps being taken towards that end are heartening.
A report in this paper has pointed towards states undertaking several small reforms to give a fillip to businesses. The Rajasthan government has, for instance, eased restrictions, allowing women to work in commercial establishments during night hours. Delhi has recently done away with the requirement for restaurants and hotels to seek police certificates and licences. Tamil Nadu has expanded the number of industries in the 'white category', which exempts them from taking consent from the state pollution board. Alongside such steps, at the level of the central government, the Deregulation Cell in the Cabinet Secretariat is looking at national regulations. These are welcome measures. But much more needs to be done and quickly.
There are several areas such as land, labour, utilities and logistics where regulations need to be streamlined and the compliance burden eased. A report from Teamlease earlier this year titled 'Compliance 3.0', had, for instance, noted that businesses in India are 'governed by 1,536 acts and rules, 69,233 compliances and 6,618 filings'. Though there may have been some improvement in the situation, those figures nonetheless indicate the scale and extent of the challenge of regulation. The compliance burden, the report had pointed out, tends to increase as a company grows, forcing firms to remain small. In the case of land, another contentious area, a study quoted in the Economic Survey 2024-25, titled, 'State of Regulation: Building standards reforms for jobs and growth', notes that factories in India lose a significant portion of land to building standards. These regulations lead to the locking up of productive land and reduce opportunities to create jobs. Several of these areas lie under the ambit of state governments, making them critical to easing the regulatory burden. The Economic Survey had argued that 'complementing the efforts of the Centre, states must pursue systematic deregulation as a policy priority'. A careful analysis of the costs and benefits of regulations needs to be undertaken. Greater economic freedom must be provided to agents in the country. As the Survey noted, 'strategic and systematic deregulation can catalyse growth, innovation, and competitiveness'.
