More Signs of Overhauling the Compliance Framework, Pg 6

Key Highlights

Corruption & Compliance Burden

• India Business Corruption Survey 2024:
  • 66% of businesses paid bribes, with 54% coerced for permits, compliance, or licensing.
  • Sectors most affected: Labour, GST, Income Tax, Pollution, Provident Funds, Property Registration, Health.
• EY-FICCI Survey: 80% of businesses see corruption as a barrier to FDI.

Regulatory Reforms & Gaps

• Jan Vishwas (Amendment of Provisions) Act, 2023 decriminalized 180 provisions.
• Budget 2025 introduced Jan Vishwas 2.0, decriminalizing 100 more provisions, but 20,000 provisions with imprisonment clauses remain.
• Labour Code Reforms: 29 labour laws merged into 4 labour codes, but await implementation.

Challenges in Compliance Framework

• Over 9,420 compliance updates in a year (~36 daily), leading to inefficiency and bribery.
• Officials use compliance rules to extract bribes and threaten businesses with shutdowns/arbitrary penalties.

Digital-First Compliance Approach

• Current System:
  • 40+ government departments require multiple self-attested & notarized documents.
  • Businesses manage 23+ identity numbers (PAN, GSTIN, CIN, etc.), leading to redundancy.
• Solution – Unified Digital Business Identity:
  • A "One Nation, One Business Identity" system can streamline regulatory approvals.
  • Digi Locker-based authentication can cut approval times from months to days.

Global Competition & Investment Risks

• U.S. governance reforms (DOGE) improving business efficiency – India risks losing investment.
• India’s $4 trillion economy must cut red tape or lose entrepreneurial & foreign investment opportunities.

Analysis & Way Forward

• Urgent need to overhaul compliance with predictable regulations and anti-corruption measures.
• Policy Recommendations:
  • Strict regulatory timelines for compliance changes.
  • State-level adoption of labour reforms.
  • Investment in digital compliance platforms to reduce manual interventions and bribery risks.

Mains Mock Question:

"Examine the impact of excessive compliance regulations on business growth in India. Suggest measures to improve transparency and ease of doing business."