Top panel on regulatory reforms to cut compliance burden likely by June, states to be members

The Economic Survey for 2024-25 had batted for states to pursue “systematic deregulation” as a policy priority so that economic freedom of factors of production is augmented.

The Centre may set up the much-awaited committee on regulatory reforms in the non-financial sector by the end of June, likely headed by the Cabinet Secretary, one government official has told Moneycontrol, with a report likely in a year’s time.

Sources also said the committee is likely to focus on reducing compliance burden for businesses across states, and may recommend steps such as digitization, incentives to businesses, liberalisation of standards and controls, etc.

The committee will also constitute senior officials from all states, UTs, and the Niti Aayog, the person said, on condition of anonymity.

Finance Minister Nirmala Sitharaman during her Budget speech on February 1 had said that a high-level committee for regulatory reforms will be set up, to review all non-financial sector regulations, certifications, licenses and permissions.

“The objective is to strengthen trust-based economic governance and take transformational measures to enhance ‘ease of doing business’, especially in matters of inspections and compliances. States will be encouraged to join in this endeavour,” Sitharaman had said.

The Economic Survey for 2024-25 had encouraged states to pursue ‘systematic deregulation’ as a policy priority, to augment productivity.

“States can begin the deregulation exercise by identifying regulations that affect decision-making in enterprises. Next, states can compare their regulations on these issues with those in other states and countries. Finally, after identifying alternatives, states must examine the economic impact of their current regulation on a single sample enterprise,” the survey, authored by Chief Economic Advisor V Anantha Nageswaran had said earlier this year.

“States need not undertake a complex analysis of all economic effects. Instead, states may undertake a data-informed exercise of mapping how much resources, time, and risk a single enterprise must devote to compliance,” the survey had said.

Ranen Banerjee, partner, PwC India said, “The focus of the commission should be to assess each regulation on three parameters, namely, cost of compliance, enforceability of compliance and human touch needed for compliance. It should also look at the ability of enterprises to navigate any compliance requirement - the scale question while being sensitive to removing barriers to dwarfing tendencies of MSMEs that tend to keep scale smaller to avoid regulatory burden.”