MC EXCLUSIVE End of 'inspection raj': NITI Aayog proposes end to licences, permits in radical regulatory overhaul

The panel has also called for stable policies and tax regimes, and for every regulation to be assessed for its compliance cost to businesses and enforcement burden on the government.

A NITI Aayog panel has proposed a sweeping overhaul of the nation's regulatory framework. The high-level committee, led by Niti Aayog member and former cabinet secretary Rajiv Gauba, has recommended scrapping licences, permits and no-objection certificates (NOCs), ending "inspector raj", and shifting routine inspections to accredited third parties.

The panel has also called for stable policies and tax regimes, and for every regulation to be assessed for its compliance cost to businesses and enforcement burden on the government, according to the report of the high-level committee on Non-Financial Regulatory Reform.

The high-level committee’s proposals make up the so-called Jan Vishwas Siddhant, a trust-based approach to regulation. The key recommendations of the panel include:

Licensing

Licensing and compliance requirements shall be proportionate and graded by risk. Prior approvals in the form of license, permit, NoC, etc., shall be required only for reasons of national security, serious harm to public safety, human health, or environment or significant public interest, and only as provided under the statute. Any activity not explicitly prohibited under the law shall be exempt from prior permission.

Registration

Registration may be required for maintenance of databases or other important purposes. Registrations shall not be subject to approvals or rejections. Self-registration based on minimal documentation shall be the norm. Validity of licenses, permits, and NoCs will ordinarily be perpetual. In cases considered necessary for reasons of national security, serious harm to public safety, human health, or environment or significant public interest, a validity period of five or ten years may be prescribed as deemed appropriate.

No inspector raj

Inspection should be based on computer-assisted randomised selection and risk assessment. Inspections shall be conducted by accredited third parties, as a norm. Selection and periodic performance assessment criteria for third parties shall be put in place and published.

No sudden changes in policy/regulations

There shall be a fixed calendar for regulatory updates, i.e changes/ amendments shall be introduced on a fixed date every year unless deemed necessary for compelling reasons. New regulations and amendments shall be implemented after meaningful consultations with all stakeholders and with adequate lead time.

Regulatory impact assessment

Existing and future regulations shall be subject to an assessment of the cost of compliance for businesses and the cost of enforcement to the government. To facilitate this, a Regulatory Impact Assessment Framework with implementation timelines will be put in place.

Penal provisions

Criminal punishments for minor, procedural/technical offences shall be decriminalised. Criminal punishments (imprisonment or fine) shall be imposed only for serious offences involving a threat to national security or public order, or to human health; fraud; serious harm to the environment; or other acts of omission or commission that can result in non-compensable externalities.

Punishments (imprisonment, fine, or penalty) shall be commensurate with the severity of the offence. A comprehensive review of all criminal provisions under existing and proposed Acts shall be undertaken, based on the above principles.

Digitally enabled compliance framework

All filings related to regulatory compliance shall be digitally enabled. Interoperability shall be ensured at the ministry level so that information once submitted is not required to be filed again.

Interoperability of databases across government shall be created. Departments shall identify and publish APIs for use by other departments. It is expected that the framework recommended above will be appropriately circulated by the government to all Ministries/ Departments as a set of guiding principles. In due course, state governments and local bodies should also be encouraged to adopt this framework to promote ease of living and ease of doing business.

According to the NITI Aayog committee, the key principles were finalised after extensive consultations and are intended to guide the country’s regulatory framework. The committee recommended that all ministries and departments should apply these principles to all existing and future regulations and bring current rules into conformity with these principles in a time-bound manner.

The report added that the committee’s recommendations aim to shift the government toward a trust-based regulatory approach, embedding principles of trust, efficiency and transparency to create a modern framework that fosters greater confidence among citizens and businesses alike.