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Home / Opinion / Views /  Free India from the grip of regulations and compliances

Those who believe in the never-before possibilities of India’s growth are often baffled, sometimes even annoyed and indignant, over the country’s gargantuan regulatory and compliance apparatus that blocks, chokes and obstructs the exponential India story. Supposedly to protect the citizenry and the state from unscrupulous swindlers and outright fraudsters, this vast machinery of impediments makes doing business in India nothing short of a nightmare.

In Jailed for Doing Business (bit.ly/3vFWUWX), a recent report released by Observer Research Foundation (ORF), co-authored by Gautam Chikermane, vice-president, ORF, and Rishi Agrawal, co-founder and CEO at Avantis RegTech, a shocking 69,233 unique compliances have been listed, of which 26,134 clauses have imprisonment as penalty for non-compliance. Of the most compliance insistent states, five have the highest number of imprisonment clauses—Gujarat (1,469), Punjab (1,273), Maharashtra (1,210), Karnataka (1,175) and Tamil Nadu (1,043). What is utterly frustrating and dismaying is that despite such a stringent compliance regime, with so many rules, regulations and draconian clauses, the real crooks repeatedly seem to evade the inordinately long arm of the law.

India’s Prime Minister Narendra Modi is fully cognizant of these impediments to India’s growth. On 21 April, he used the occasion of the 15th Civil Services Day not only to hand out awards for excellence in public administration, but also drive home the message that our vaunted steel frame, the bureaucracy, with its complicated administrative system, was posing a huge challenge to India’s progress. Recalling his initial experience after being announced as the Bharatiya Janata Party’s prime ministerial candidate in 2013, Modi said, “I was called by the business community in Delhi when my party announced me as the prime ministerial candidate for the first time in 2013. I give a speech, with 4-6 months still left before the general elections of 2014. When they asked me what I would do, I said that I will abolish one law every day, I will not make new laws. So they were surprised! And I did abolish 1,500 laws in the first five years."

Mincing no words, Modi said, “Now you see there were hundreds of laws like this, I believe they have become a burden for the citizens of the country. Tell me, friends, why should we live with such laws? Even today, my opinion is that with many such laws, which are lying useless, why don’t you take some initiative and finish them off? Get the country out of this trap."

With the cabinet secretary Rajiv Gauba sharing the dais, Modi continued, moving to the endless set of compliances demanded of Indian citizens: “In the same way, we keep asking for all kinds of compliances from citizens. I told the cabinet secretary that while we try to do the work [through our software and technology outsourcing] for the rest of the world, you should take responsibility for this, free the country from compliances, free the citizens. 75 years of independence, why are you keeping citizens trapped in this snare? And six people will be sitting in an office, every table person will have information, but still they will ask separately, will not take it from the side!"

Let us return to Jailed for Doing Business, whose contents were collected over the last seven years by TeamLease and RegTech. The monograph classifies its findings under seven broad categories ranging from labour, finance and taxation, environment, health and safety to secretarial, commercial, industry-specific and general areas. The regulatory excess chokes profit-oriented as also not-for-profit institutions. Not only is starting a business or institution hard in India, but closing it down is even more arduous. As Manish Sabharwal, chairman of TeamLease, puts it, “The excessive criminalization of India’s employer compliance universe breeds corruption, blunts formal employment and poisons justice."

The report is replete with recommendations, including rationalizing business rules and regulations, restraining criminal penalties, and undertaking broad-based policy reforms. Not just will the general business environment in India improve with deregulation and restructuring of the country’s compliance mechanism, the dignity of wealth-creators, innovators, entrepreneurs and business leaders will also be safeguarded.

The Prime Minister’s clarion call to civil servants affords an excellent opportunity for the central government, as well as various states of the Union, their various ministries and departments, and the country as a whole to kick off a comprehensive reform process that will take India to new heights of prosperity and well-being.

This is the first of ‘Impediments to Growth’, a series highlighting the laws and regulations that hold India back. These are the author’s personal views.

Makarand R. Paranjape is an author and academic.

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