NITI Aayog calls for deregulation to foster innovation
India's policy think tank, NITI Aayog, has called for a significant reduction in rules, regulations, and permissions for businesses. The aim is to unleash innovation and competition while avoiding over-regulation that could stifle growth.
India's government policy think tank, NITI Aayog, has urged for a substantial deregulation of rules, regulations, and permission processes to foster industrial and citizen freedom.
Rajiv Gauba, a member of NITI Aayog, stated that reforms must "liberate the industry and citizens at large from this stifling chokehold of rules, regulations, and permissions." He indicated that the government intends to meticulously scrutinize existing laws and processes, evaluating them against the principle of trust-based governance. This aligns with the consideration of a Digital Competition Bill, designed to impose obligations only on systemically significant enterprises, rather than applying uniform rules to all players.
Gauba advocated for a risk-based approach to licensing, suggesting licenses should only be required for national security reasons or activities posing significant risks to health or the environment. For other cases, automatic registration should suffice. Necessary licenses should be long-term, potentially 10 years, and inspections should be risk-based, not random. "Permitted unless prohibited; rather than prohibited unless permitted," he articulated.
He cautioned against over-regulation, citing it as a reason for the EU losing competitiveness to the US due to bureaucratic hurdles. Conversely, under-regulation can lead to crises. Therefore, striking a dynamic balance is crucial. Regulations should also promote competition, allowing new entrants to enter and exit markets frictionlessly, thereby disciplining incumbents through the threat of competition. Non-discriminatory access to infrastructure and resources is also essential.
NITI Aayog plans to enhance collaboration with the private sector to leverage expertise and improve service delivery. Simplifying and digitizing regulatory processes is viewed as an ongoing endeavor. Gauba also mentioned that Artificial Intelligence (AI) could be utilized by fintech companies to combat fraud, and that insurance penetration needs to increase to improve credit accessibility for small businesses.