Flag pending deregulation issues, Cabinet Secretariat tells states

The Cabinet Secretariat is conducting a deregulation exercise to enhance ease of doing business across 23 priority areas

The Cabinet Secretariat has asked state governments to flag any pending issues they face with central government departments in connection with its ongoing deregulation exercise, multiple senior government officials said, ahead of a meeting of chief secretaries later this month to review the reforms. 

The Cabinet Secretariat last month started the second phase of the deregulation exercise to enhance ease of doing business across 23 priority areas, or PAs, related to "land use, building and construction, utilities and permissions, labour, environment, education, health and overarching priorities", a senior government official stated. 

The first phase comprised 23 PAs pertaining to simplifying land and building regulations, streamlining business approvals, modernising labour and employment norms, enhancing digital delivery of government services, and expanding the use of third-party certifications and inspections. Since the first phase is largely complete, the Secretariat has started the second phase of deregulation, the official mentioned. 

Bringing any issues pending with Central government departments would help in their resolution, the official said. 

The push for resolution comes after Cabinet Secretary T V Somanathan held a meeting with chief secretaries of all state governments on the deregulation exercise on November 14. At the meeting, states were urged to ensure “maximum implementation” of the phase-1 PAs before the second half of December.

 

“In the second half of December, a national conference of all chief secretaries is expected to be held. The states have been asked to do ‘maximum implementation’ before this meeting," a second government official told Business Standard. 

State governments have submitted their action plans for the phase-1 PAs, including milestones and timelines for each. They have been asked to conduct “regular monitoring” of these milestones and timelines. 

State governments have also been asked to inform the Cabinet Secretariat’s deregulation cell about all “pending issues” with any central government ministry that relate to any of the PAs, the government officials said. 

During the November 14 meeting, it was observed that Tripura and Madhya Pradesh have made the most progress on implementing the phase-1 PAs. "These two states have already implemented 21 out of 23 phase-1 PAs," a third government official mentioned. 

Queries sent by Business Standard to the Cabinet Secretariat did not elicit a response at the time of going to press.

 

The phase-2 priority areas

 

The idea behind the deregulation exercise is to simplify and modernise regulations in key priority areas. In the phase-2 deregulation exercise, the first three priority areas relate to land, which remains a complex regulatory issue. 

 

The very first priority area (PA1) focuses on simplifying or automating the process for Change of Land Use (CLU). If a plot is marked as agricultural, for instance, but a company wants to build a factory or warehouse on it, the company needs CLU approval. This process currently involves several permissions and long delays, which slows down new projects, a government official said. 

 

Under phase-2 exercise, PA2 calls for a clearer land-use framework so that construction permissions can be granted even while master plans are being prepared. This helps avoid multi-year waiting periods. PA3 aims to make better use of land within existing and upcoming industrial clusters, with a focus on giving micro, small and medium enterprises (MSMEs) easier access to suitable plots.

 

The next set of priorities—PA4 and PA5--covers ‘building and construction’ and rationalising fire-safety norms.

 

Then there are priorities—PA6, PA7 and PA8--dealing with utilities, permissions and licensing requirements, many of which are outdated or overlap each other. For instance, in the case of the Shops and Establishments Act, which governs working hours and operating conditions for retail and service establishments, there’s a need for greater flexibility.

 

PA9 proposes making the State Industrial Infrastructure Development Authority or the State Industrial Promotion Board the single nodal point for all approvals. This reduces the need for entrepreneurs to visit multiple departments. PA10 calls for a new law or set of guidelines to make it easier to establish and run MSMEs, since these enterprises form the backbone of India’s economy, the officials mentioned.

 

Labour regulation is another major area of reform. PA11 aims to simplify and digitise the registration and licensing processes under various labour laws.

 

Among others, PA12 recommends speeding up environmental clearance by getting State Expert Appraisal Committees and State Environment Impact Assessment Authorities to meet more often. This is important because delays in environmental clearance stall many industrial and infrastructure projects. 

 

PA13 proposes creating land banks of degraded forests and non-forest land and linking them to the PARIVESH (Pro-Active and Responsive Facilitation by Interactive, Virtuous and Environmental Single-window Hub) portal. This would help project developers easily identify a separate suitable land for compensatory afforestation, which is a legal requirement if they are using forest land for their project.

 

Education is another area where states have been asked to simplify rules. PA14 removes minimum land requirements for setting up schools. PA15 aims to ease outdated infrastructure and equipment requirements for schools. PA16 talks about reducing the "minimum land requirement" to set up private universities, which supports the expansion of higher education. PA17 reduces the endowment fund needed to establish higher education institutions (HEIs). PA18 relaxes strict infrastructure and equipment norms for HEIs that are not funded by the government, giving them more flexibility.

 

In health, PA19 simplifies registration and no objection certificate requirements for medical practitioners across states. PA20 proposes a single-point approval system for all healthcare-specific licences, which would reduce complexity for hospitals and clinics.

 

The final set of priority areas focuses on improving the overall functioning of government systems. PA21 seeks to monitor and reduce turn-around times on the single window system; PA22 aims to create a central, digital repository of all state-level laws, rules, regulations and government orders; PA23 calls for an auto-appeal system under the Right to Services Act or its guidelines.