Filter out bad regulations to reduce the unease of living

Live Mint, August 19, 2020

By Pradeep S. Mehta 

Enhancing the ease of living has been a long-stated aim of the government. It has gained prominence in light of the challenges posed by the covid-19 pandemic. Prime Minister Narendra Modi himself has articulated this vision in many of his speeches, most recently at the launch of the National Education Policy 2020, wherein he highlighted the role of the youth in achieving this goal and assuring the poor a better life.

Egged on by the pandemic, many rich and poor countries, including India, are realizing that ease of living should be a duty-bound assurance of governments to their citizens. As a result, a citizen-centric shift is visible now in their policies, aimed at reducing the unease of living. A recent press release by the United States government has sought to highlight that its deregulatory actions are focused on creating greater opportunities and prosperity for US citizens than ever before.

Regulations that harm the interests of workers and disproportionately burden consumers and low-income citizens are being rolled back. These deregulatory actions are likely to help citizens hugely through savings on time and money, and also raise productivity and wages.

More recently, a group of Republican congressmen in the US has sponsored a Freedom from Regulations Act to reduce the regulatory burden on citizens by ensuring government agencies comply with laws and act transparently. It intends to ensure that independent agencies comply with common sense regulatory restraints, so that the rules they make life easier for people.

The thought behind these initiatives is clear: sub-optimal regulations are a bane to the ease of living, and must be corrected.

Unfortunately, it appears that such a realization has not dawned upon Indian policymakers yet. The government’s idea of ease of living has been limited to perception surveys on the quality of life in cities, conducted by the Union ministry of housing and urban affairs, and a nationwide survey on the delivery of basic services to assess households deprived of flagship schemes (, done by the ministry of rural development.

In his recent address at the US-India Business Council’s India Ideas Summit, Modi also seems to have linked ease of living with the ease of doing business. Under the former rubric, he had earlier listed initiatives like the ease of making digital payments, and of obtaining passports and income tax refunds.

No doubt, these are important. However, ease of living is much more than the ease of doing business or framing citizen-centric policies. India’s existing regulatory cholesterol needs to be reduced simultaneously. In other words, in addition to promoting the ease of living through new initiatives, we need to reduce the unease of living by reforming old policies.

How can this be achieved? A structured process informed by public consultation and cost-benefit analyses is the way forward. To this end, there is a need to create a publicly-available user-friendly repository of all applicable regulations. Such initiatives already exist in the country.

Thereafter, every regulation in the database needs to be subject to a three-step test of legality, necessity and proportionality.

This would involve asking three questions. First, is the regulation legal (or backed by legislation)? If there is no primary law from which it emanates, or if some part of it exceeds the remit of the source legislation, it should be struck down as ultra vires.

The second question to ask of each regulation that passes the first test is whether it is necessary. This requires examining its objectives, the process involved in achieving them, and the relevance as well as possibility of their being achieved. If the stated objectives are no longer valid, or if the regulation is unlikely to achieve its goals, it should be done away with.

The final filter for each regulation that survives the first two should be this question: Is the regulation proportionate? This would involve analysing direct and indirect costs and benefits imposed on stakeholders, to identify those who have been disproportionately impacted. In particular, we need to consider costs imposed on vulnerable stakeholders. Any such regulation will need to be judiciously amended for the sake of proportionality.

The above three-step test could be implemented by setting up a “regulatory impact assessment” framework. This would ensure robust stakeholder consultation, particularly taking into account perspectives of those groups that typically remain unrepresented in regulation-making. It would also enable an analysis of the costs and benefits of various regulations and their alternatives.

For its success, this exercise would need to be conducted at central, state and local levels, and should involve all relevant government departments. Something similar has been attempted in the US through its Governors’ Initiative on Regulatory Innovation, which aims to reduce outdated regulations, advance occupational licensing reforms, put people over paperwork, and align federal and state regulations. The initiative seems to work, with federal, state, local and tribal leaders having championed occupational licensing and other deregulatory reforms.

The Indian government must realize that reducing the unease of living is a pre-requisite for achieving the ease of living. The sooner this happens, the better.

Amol Kulkarni of CUTS contributed to this article.

Pradeep S. Mehta is secretary general, CUTS International

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