The Art of Letting Go: Why deregulation is a mark of state maturity

The relationship between regulation and deregulation is not oppositional—it is dialectical.

Can a government show strength by stepping back?

If a society wishes to advance with justice, grow with inclusion, and compete with resilience, the scaffolding that holds it upright is neither ideology nor brute strength. It is regulation. At its best, regulation prevents collapse, curbs excess, and reinforces public trust.

But the real test of institutional maturity lies in something far harder to do—deregulation. That rare act signals the intellectual honesty to ask whether a rule has outlived its purpose and the courage to retire it.

This is not a zero-sum choice. The relationship between regulation and deregulation is not oppositional—it is dialectical. One protects, the other propels. One anticipates risk, the other enables reward. Together, they shape the architecture of a state that inspires public confidence and energises private ambition.

Regulation as Trust Infrastructure

Consider the financial sector. Banking and insurance cannot function without robust guardrails. A depositor hands over their life savings trusting that someone—somewhere—has imposed discipline on the bank’s behaviour. In India, that someone is the Reserve Bank of India. It doesn’t merely supervise; it instils confidence. Its prudential norms are compasses, not just checklists. Without them, banking would run on the roll of a dice.

Insurance, too, trades in long-term promises. Without strict solvency norms, product scrutiny, and reliable claims processes, the promise embedded in an insurance policy loses weight. In these domains, regulation is not just necessary—it is foundational.

In Fast-Moving Sectors, Agility Is the New Discipline

However, not all sectors operate on long timeframes. In today’s most dynamic domains—climate tech, fintech, gig work, digital assets, and other emerging tech sectors—innovation moves faster than rulebooks. These areas need a different regulatory posture: one that listens, learns, and evolves.

India’s fintech journey is illustrative. The UPI and Account Aggregator frameworks were not born as finished products. They evolved iteratively through stakeholder feedback and policy flexibility. This is how a live regulatory organism behaves—by co-evolving with innovation. The result: a globally admired digital payments ecosystem known for scale, simplicity, and inclusion.

Environmental regulation, too, cannot be fossilised. ESG norms, circular economy mandates, and decarbonisation efforts must be science-led, economically viable, and globally aligned. In such cases, the regulator becomes more than a sentinel—it becomes a conductor, orchestrating progress.

Every Regulation Needs a Sunset Clause

Some regulations—especially those relating to fiduciary trust, capital adequacy, and consumer protection—require constant vigilance. But others must be task-specific and time-bound. Emergency interventions, in particular, must expire by design. Otherwise, the temporary becomes permanent—and the exceptional becomes routine.

The COVID-19 pandemic made this clear. Loan moratoriums, digital KYC, and emergency reallocations were appropriate then, but many persisted beyond their shelf life. Going forward, we need to engineer regulatory expiry. Digital architecture can embed this logic—through alerts, audit trails, and automatic revalidation triggers.

A regulation that has outlived its purpose becomes either a bureaucratic burden or a brake on innovation. To avoid this, each major regulation should define Key Performance Indicators (KPIs) upfront—whether in job creation, fraud reduction, innovation velocity, or market deepening. Independent, periodic reviews should be institutionalised and made public.

Towards Participative, Transparent Rule-Making

Entrepreneurs don’t fear scrutiny—they fear unpredictability. What enables healthy risk-taking is intelligent, iterative, and self-aware regulation.

The process of making and unmaking rules must also become more transparent. The age of dense PDFs, short consultation windows, and opaque decision-making must end. We need clause-by-clause feedback tools, sentiment tracking, interactive explainers, and public dashboards. A rule-based economy depends on public trust—and trust depends on transparency.

Moreover, regulation must keep pace with economic reality. This means structured, ongoing dialogue—not just with industry and government, but also with technologists, civil society, and consumers. In an interconnected economy, rules ripple far. Regulatory coherence requires a systems view.

Deregulation: Confidence, Not Neglect

Today, regulatory choices are instruments of global influence. As hard power gives way to normative leadership, nations are defined by the standards they set. GDPR shaped the global data debate. India can lead on digital identity, platform governance, green finance, and public trust infrastructure.

In this context, regulatory credibility is not just domestic policy—it is geopolitical capital.

And the most honest expression of state confidence is the act of deregulation. Removing a law isn’t abandonment—it’s the evolution of a society. It signals trust in citizens, markets, and institutions. Deregulating licensing unlocked entrepreneurship. Deregulating internet protocols unleashed a digital revolution. When done with care, deregulation becomes design—not drift.

A Playbook for Regulatory Maturity

To move forward, India must now embrace a deliberate approach to deregulation, which includes:

* Identifying legacy regulations that no longer serve their intended purpose

* Building institutional capacity to review the regulatory stock regularly

* Defining clear, outcomes-based metrics for new and existing rules

* Creating sandbox environments to test policies in emerging sectors

Letting Go Is the Highest Form of Governance

At its best, regulation is an ethical commitment—to citizen dignity, enterprise energy, and societal trust. Deregulation, when exercised with discernment, is its highest expression. It says: we trust our people, our systems, and our future.

India now stands at a defining inflection point. A rising economy. A digital powerhouse. A potential benchmark for governance innovation. The time has come to build a state that listens more, imposes less, iterates faster, and retires irrelevance with grace.

In doing so, India won’t just catch up with global standards. It will set them.