'Permitted unless prohibited': NITI Aayog's next-gen reforms guidebook

Govt looking to clear regulatory 'cholesterol': Gauba

A day after Shaktikanta Das, principal secretary-2 to the Prime Minister, said the government remained committed to reforms and had more measures in the pipeline, NITI Aayog Member Rajiv Gauba outlined an expansive deregulation agenda aimed at dismantling the new “avatars” of the Licence Raj. Gauba, who heads two government panels on next-generation reforms, said the Centre would move to a principle of “permitted unless prohibited”, marking a paradigm shift from “prohibited unless permitted” approach. 

“The 1991 reforms dismantled industrial licensing, but not the Licence Raj. Licensing reemerged by proxy in many avatars,” Gauba said at the Confederation of Indian Industry’s (CII’s) Annual Business Summit on Tuesday. He said every unnecessary permit imposed on businesses today is effectively a continuation of the pre-liberalisation regime of bureaucratic controls. 

 

The reforms push is part of the next-generation agenda outlined by Prime Minister Narendra Modi from the Red Fort last August. Gauba said the committees working on these reforms are guided by what the government calls Jan Vishwas Siddhant, aimed at clearing the system’s “regulatory cholesterol”. 

“Regulatory changes should not be introduced at random but should follow a fixed annual calendar, unless there are compelling reasons for emergent change. All existing and future regulations should be subjected to regulatory impact assessment and assessment of cost of implementation,” he said. 

Gauba said licensing should be limited to matters involving national security or activities posing serious risks to human health or the environment. Automatic self-registration, he said, should become the norm. “Licences that are necessary should have perpetual or long-term validity. There should be no requirement for frequent renewals,” he said. 

Among the most significant changes under consideration is the removal of government from routine inspections. Inspections, Gauba said, should be risk-based and carried out by third-party entities as a rule. In November, the committee on non-financial sector reforms headed by him recommended suspending or deferring more than 200 quality control orders (QCQs), arguing they had become an additional compliance cost. 

Gauba urged industry not to waste the opportunity that has emerged for India now, while reiterating the government’s commitment to reforms. “The government has eliminated over 42,000 compliances and decriminalised 3,700 provisions,” he said. 

“We must introspect if we have taken full advantage of these propitious conditions. 

We should be able to replicate the Apple story multiple times over.” 

The next phase of reforms, he said, would involve “nuts and bolts” changes that are often unglamorous but critical to improving the ease of doing business. The former Cabinet secretary cautioned, however, against automatically mimicking global standards without accounting for India’s developmental priorities and contextual realities. 

He acknowledged that while the Centre had delivered several big-ticket reforms, implementation gaps persisted at the state and municipal levels. Industry has argued that the benefits of the Jan Vishwas legislation have yet to fully reach businesses. 

“On criminalisation, despite the two Jan Vishwas legislations, the numbers have not come down. This is because a lot of unnecessary criminalisation is in the state and municipal laws,” he said. 

The government has constituted a deregulation committee headed by Cabinet Secretary T V Somanathan to coordinate reform efforts with states. 

Gauba said India’s economy had reached an inflection point and sustaining growth over many years was now imperative. “For Indian companies and global firms, we are a vast market of 1.4 billion with rising incomes. But we should be an attractive proposition as a global production and an innovation house, not just for domestic consumption,” he said. 

Gauba also urged industry to move away from demands for protectionism, saying India’s expanding network of free trade agreements would benefit exporters only within a framework of reciprocity. Echoing broader government concerns as put forth by Das a day earlier, the NITI Aayog member added said industry must increase investments in research, development and skilling, arguing these responsibilities cannot rest solely with the state.