Deregulation must define India’s next generation of reforms, with the focus shifting from big-ticket changes to dismantling the maze of permissions, approvals, registrations and renewals that continues to burden businesses and citizens, said Rajiv Gauba, Member, Niti Aayog, at the Global Fintech Fest on Thursday.

 

“In one word, deregulation. The next-generation reform architecture has to be defined by deregulation,” Gauba said, while mentioning that several major reforms over the past decade had already changed the architecture of the economy.

 

He cited reforms like the Goods and Services Tax (GST), which created a unified national market; the insolvency framework, which enabled capital and assets to be redeployed; liberalisation of foreign direct investment (FDI); and the opening up of sectors such as defence, space and nuclear energy to private participation. The four labour codes were another major reform helping industry benefit from economies of scale and formalisation.

  

India abolished industrial licensing in 1991, but the ‘Inspector Raj’ survived, he said, with licences resurfacing in different forms across central, state and municipal governments.

 

According to Gauba, the next phase of reforms would require a systematic review of this regulatory maze under a trust-based governance framework.

 

“The next generation reform has to be to liberate the industry and citizens at large from this stifling chokehold of rules, regulations, permissions. So, our task is cut out. To scrutinize the maze of laws, regulations, rules, processes with a fine form. And test them against the touchstone of trust-based governance,” he said.

 

Under the framework being developed for regulatory reform, licences should be required only where there are compelling reasons, such as national security or serious risks to human health or the environment. Registrations in other areas should be automatic, while licences that are necessary should have perpetual or long-term validity.

 

“Inspections should not be random. They should be risk based. So, this is a paradigm shift which we are trying to bring about. Moving to, as has been described, permitted unless prohibited. Rather than prohibited unless permitted,” Gauba said.

 

He said regulatory changes should follow a fixed calendar rather than being introduced randomly, while existing and new regulations should undergo regulatory impact assessments and an assessment of their compliance costs.

 

The reforms, however, cannot be confined to the Centre. Gauba said several areas that directly affect businesses fall within the jurisdiction of state and municipal governments, including land use, building permits and pollution consents.

 

“In some areas, centres and states have to work together for deregulation to become a reality,” he said.

 

He pointed to steps already taken to streamline environmental regulations, simplify quality-control requirements and reduce compliance burdens for MSMEs. He also cited efforts to make the National Building Code less prescriptive and clarify its voluntary nature.

 

The implications could be significant for sectors such as real estate and tourism. Gauba said changes to building norms could unlock substantially more built-up area, while reforms in tourism could reduce the number of state-level permits required by tour operators and multiple licences required by hotels.

 

He also said India’s fintech ecosystem had helped democratise payments, insurance and access to the stock market, while government-built digital public infrastructure had provided the foundation for this expansion. At the same time, he cautioned against excessive regulation as technology and fintech evolve.

 

“Over-regulation will push innovation offshore. On the other hand, under-regulation can produce, you know, a crisis and the loss of confidence.” Regulation, he said, should therefore be principle-based, technology-neutral and scaled according to risk, while promoting competition and ensuring non-discriminatory access to underlying infrastructure.

 

For India’s $30 trillion economy ambition by 2047, Gauba said the reform process would need to extend across all levels of government, with states playing a critical role.

 

“There cannot be a Viksit Bharat without Viksit states. So, states need to think and plan like that… they have realized now that reform is the only way to get investment, accelerate growth, and create jobs.”