Deregulation Commission to nudge states to reduce compliance burden

The Deregulation Commission, expected to be established by mid-April, will work closely with states that have high compliance requirements, which are hindering project completion and investment inflows.

The Centre has already set up a task force, led by Cabinet Secretary T.V. Somanathan, with officials from NITI Aayog and the PMO. This task force held its first meeting in January to outline key areas of reform, including reducing redundant paperwork, digitising proposals, expediting single-window clearances, and eliminating unnecessary approvals like multiple No Objection Certificates (NOCs).

"Many states have had projects stuck for years due to regulatory concerns, and they have raised this issue themselves," an official noted.

Official added that the government has been gradually de-regulating at federal level since past few years, but an aggressive push is required nationwide, especially at the state level. 

Prime Minister Narendra Modi recently reiterated the government’s focus on easing regulatory burdens. “We have ended hundreds of compliances, and now with Jan Vishwas 2.0, we are further reducing them. To minimize government interference, a Deregulation Commission is also being established,” he stated at an event organized by ET Now.

While the Prime Minister emphasized reduced government intervention, sources suggest that the commission will likely include policy professionals acting as intermediaries between the government and industry. However, senior bureaucrats, including the Cabinet Secretary and Finance Secretary, are expected to play a crucial role in overseeing the process, according to an official.

Chief Economic Adviser V. Anantha Nageswaran has also stressed the need for deregulation at state and local levels. Speaking at an Assocham event on December 5, 2024, he highlighted that reducing bureaucratic hurdles is essential for economic growth and achieving India’s employment and manufacturing targets.

Additionally, the Economic Survey 2024-25 reinforced the need for deregulation, particularly for MSMEs, to enhance ease of doing business. It proposed a three-step framework for states: identifying redundant regulations, conducting comparative analyses, and assessing the financial impact on enterprises.