Saturday | 25 July 2020 | 1100-1200 hrs
Over the years, the idea of regulatory reforms in India has become closely linked with ease of doing business. Measures like reducing compliance burden, making it easier to start a business, hire and retrench workers, particularly for large enterprises, have captured the imagination. It has been argued that, unfortunately, this approach has failed to consider concerns of informal entrepreneurs, micro small and medium enterprises, workers, and citizens, who bear disproportionate burden of our regulatory frameworks.1 Such worries have gained prominence in light of developments on account of Covid-19 pandemic.
There is, thus, a need to rethink our approach towards regulatory reforms for making them inclusive and sustainable. This can happen by making citizen well-being and sustainable progress as core objective of regulatory reforms, and adopting a whole of government systems approach to design and implement such reforms. An appeal to the Prime Minister and Chief Ministers of all states of India on these lines has been made.
The panel is expected to return recommendations and a report. The discussion examines the following:
- How to make regulatory reforms inclusive and sustainable?
- How to institutionalise mechanisms for enabling governments to understand stakeholder concerns?
- Incentives and disincentives required in this regard.
Dr Gursharan Dhanjal, MD & Editor, SKOCH Group
|11:05-11:45||Panel Discussion |
Moderator: Mr Pradeep S Mehta, Secretary General, CUTS International
Mr Ajay Shankar, Former Secretary, Department of Industrial Policy and Promotion
Mr Arun Maira, Thought Leader and Author
Ms Jahnabi Phookan, President, FLO & Director, JTI Group
Mr Rishi Agrawal, Co-founder and CEO, Avantis RegTech
Mr Rohan Kochhar, Director, Public Policy, SKOCH Group
Mr Udai S Mehta, Deputy Executive Director, CUTS International
Making Regulatory Reforms Inclusive and Sustainable
Saturday ● 25 July 2020 ● 1100-1200 hrs
1.1. Over the years, the idea of regulatory reforms in India has become closely linked with ease of doing business. Measures like reducing compliance burden, making it easier to start a business, hire and retrench workers, particularly for large enterprises, have captured the imagination. It has been argued that, unfortunately, this approach has failed to consider concerns of informal entrepreneurs, micro small and medium enterprises, workers, and citizens, who bear disproportionate burden of our regulatory frameworks.1 Such worries have gained prominence in light of developments on account of Covid-19 pandemic.
1.2. There is, thus, a need to rethink our approach towards regulatory reforms for making them inclusive and sustainable. This can happen by making citizen well-being and sustainable progress core objectives of regulatory reforms, and adopting a whole of government systems approach to design and implement such reforms. CUTS International has recently issued an appeal to the Prime Minister and Chief Ministers of all states of India on these lines (the appeal is available here). The appeal has been endorsed by more than 50 public intellectuals, including the SKOCH Group.
1.3. In this light, CUTS International and SKOCH Group organised a webinar on Making Regulatory Reforms Inclusive and Sustainable, on Saturday, 25 July 2020. The discussion examined following issues:
- How to make regulatory reforms inclusive and sustainable?
- What are the implementable and practical ways to institutionalise mechanisms for enabling governments to understand concerns of vulnerable stakeholders and collectively design actions to make progress?
- What incentives and/ or disincentives are required in this regard?
1.4. This was first in the series of webinars being jointly organised by CUTS International and SKOCH Group on regulatory reforms.
2. Key speakers
2.1. Key speakers in the webinar were:
- Pradeep S. Mehta, Secretary General, CUTS International
- Sameer Kochhar, Chairman, SKOCH Group
- Arun Maira, Thought Leader and Author
- Jahnabi Phookan, President, FICCI Ladies Organisation, & Director, JTI Group
- Ajay Shankar, Former Secretary, Department of Industrial Policy and Promotion
- Rishi Agrawal, Co-founder and CEO, Avantis RegTech
2.2. The webinar attracted participation from diverse stakeholder groups, including policy influencers, experts, think tanks, academia, and media.2 Close to 50 participants attended the webinar. The video recording of webinar is available here.
3. Summary of discussions
Understanding the ground reality
3.1. The discussion began with highlighting the extent of problem. Existence of disproportional regulatory framework comprising innumerable legislations, regulations, returns, challans, and compliances, was pointed out. The prevailing regulatory framework has about 1,536 acts, 69,233 compliances, 6,618 different filings, across central, state, and local laws. This framework is updated frequently, resulting in unpredictability for stakeholders.
3.2. The complication in regulatory framework increases exponentially as a business moves from single location, single entity, single activity enterprise, to a multiple location, multiple entities, and multiple activities enterprise.
3.3. For instance, there are about 900 different permutations and combinations for minimum wages just in the state of Karnataka. Employee and wages are defined differently in 16 and 13 legislations, respectively. Muster rolls needs to be maintained in 10 different legislations and formats. Permissible overtime varies with state. The nature of permissible holidays also differs with states. This has resulted in a large number of businesses remaining dwarfs and stunted.
3.4. The challenges faced by women entrepreneurs are even greater. There are only about 8 million women entrepreneurs in the country, mostly micro entrepreneurs, out of more than 58 million entrepreneurs in total. Many women entrepreneurs are engaged in traditional businesses, such as agriculture, handloom, handicrafts, and have potential to prosper in sectors like tourism, and providing repair and maintenance services for household products, particularly in rural areas.
3.5. It was highlighted that women entrepreneurs face challenges in registering companies, complying with tax laws, making necessary market linkages, and building organisational skills. Significant information asymmetry exists and they are unaware of incentives and schemes launched by the government. Necessary legal and financial support is not available and women entrepreneurs face difficulties in accessing collateral free loans. Customised tools enabling financial and digital literacy, among others, are not available.
3.6. It was suggested that women entrepreneurs need more and better health and business insurance plans, reliable care economy to be able to go out and work, a strong network, incubation centres for ideation, and mentorship.
The way forward
3.7. After highlighting the challenges faced by micro, small, and women entrepreneurs, the discussion turned to point out the reasons for such sub-optimal regulatory framework, and measures required to improve the scenario.
3.8. It was suggested that the excess of regulation is a legacy of colonial governance which has continued post-independence wherein the assumption is all wisdom lies with those governing. The stakeholder consultation process has remained weak, as a result. There is lip service to good processes like Regulatory Impact Assessment and bureaucratic attitude looking for success and recognition in short run is a disabler, as this may not be possible in a complex area like regulatory reforms.
3.9. Moreover, all reform discussion has been hitherto limited to the point of view of those relatively privileged. The citizen at the bottom of the pyramid is still not considered a natural stakeholder in discussion on regulatory reforms. There is a need to engage with citizens, think on their behalf, and articulate their concerns.
3.10. It was pointed out that the processes we use are not designed to listen to people who talk about things other than those we think are important, don’t talk in numbers, and talk in phrases that don’t seem educated to us. As a result, ordinary citizens have been marginalised from policy making processes.
3.11. In order to initiate regulatory reforms, it is important to understand the situation on the ground and identify the problem. For this, listening to different stakeholders is the key, and understanding what does well being and ease and living mean for them. The responses will be qualitative in nature, but need to be heard and understood. There is a need to put different perspectives together.
3.12. While it reassuring that ease of living is being given as much importance as ease of doing business, it is also worrying, as the measurement of ease of doing business is flawed. If we were to take a similar check-the-box approach to attain ease of living, it may be difficult to achieve the desired objectives. There is a need to build capacity among state and central governments to deep dive into specific issues and understand ground level realities.
3.13. It was pointed out that until now, regulatory frameworks have been trying to distort nature to fit into machines’ world, forcing informality to transition into formality, and expecting women to play by men’s rules. This needs to stop. We need to realise that the paradigm is shifting and nature, informality, and women will need to be given their due to ensure resilience, inclusivity, and sustainability. Consequently, going forward, regulatory reforms will need to take into account perspectives of nature, women, and informal enterprises.
4. Way forward
4.1. Following specific suggestions came out from the discussion:
- Creation of an open source Wikipedia kind of process to put in public domain all kinds to rules, regulations and compliances.
- Setting up a dedicated Compliance Commission/ Regulatory Reforms Commission within the central and state governments to work with a focussed agenda of regulatory reform and reducing compliances.
- Building domain capacity within central and state governments to deep dive, reach out to, and considering, varied stakeholder perspectives. Creating a matrix of indicators on sustainable regulatory reforms, making them public, and holding specific policy makers and public servants/ bureaucrats accountable on such matrix.
1 Kulkarni and Agrawal, The real issue: Businesses need to comply with 194 labour laws, spend Rs. 4.58 lakh per annum, 18 July 2020, The Economic Times Rise, https://economictimes.indiatimes.com/small-biz/sme-sector/the-real-issue-businesses-need-to-comply-with-194-labour-laws-spend-rs-4-58-lakh-per-annum/articleshow/77031688.cms
2 Some media coverage is available at https://knnindia.co.in/news/newsdetails/sectors/regulatory-impact-assessments-needed-to-improve-ease-of-living-conditions-cuts-intl-skoch-group and https://www.daijiworld.com/news/newsDisplay.aspx?newsID=734372 and the press release is available at https://cuts-ccier.org/for-ease-of-living-we-need-to-redesign-our-regulatory-architecture-to-listen-to-marginalised-stakeholders-cuts-international-and-skoch-group/
“For ease of living, we need to redesign our regulatory architecture to listen to marginalised stakeholders”, CUTS International and SKOCH Group
July 25, 2020
Recently at the India Ideas Summit, Prime Minister Narendra Modi reiterated that Ease of Living is as important as Ease of Doing Business.
To deliberate on mechanisms to foster ease of living for citizens, CUTS International and SKOCH Group jointly organised a webinar on Making Regulatory Reforms Inclusive and Sustainable.
Pradeep S Mehta, Secretary General, CUTS International, highlighted that at present there is a coordination failure within the government and processes adopted by the government in reaching out to external stakeholders are sub-optimal.
There is a need to institutionalise good practices like Regulatory Impact Assessment to be undertaken by dedicated specialised bodies like regulatory reforms commission at central and state levels which can reach out to stakeholders and arrive at optimal solutions.
These should include women, informal, and small entrepreneurs, and periodically review cost and benefits of regulations on such stakeholders.
Sameer Kochhar, Chairman, SKOCH Group, noted that progress is possible only through negotiation and discussion, particularly with stakeholders having differing points of view. Implementing participative policy making process will be key to ensure ease of living.
He welcomed the partnership with CUTS International, a pioneer on regulatory reforms and looked forward to further activities to take the agenda forward.
Rishi Agrawal, Co-founder and CEO, Avantis Regtech, pointed out it is difficult to manage something which cannot be measured. At present, small and medium enterprises are subjected to significant compliance costs, coupled with inconsistent and overlapping regulations.
These are forcing them to remain stunted, which, in turn, adversely impacts our economic growth generally, and in particular ease of living for micro and small entrepreneurs, their employees, and vendors.
Jahnabi Phookan, President FICCI FLO, highlighted the challenges faced by women entrepreneurs in navigating the regulatory ecosystem, while appreciating the support provided by government to such entrepreneurs.
Challenges with regard to accessing collateral free loans, market linkages, information asymmetry about government schemes and capacity building were emphasised.
She pointed out that supporting traditional and scalable businesses championed by women entrepreneurs would go a long way in enhancing growth and ease of living of citizens.
Ajay Shankar, former Secretary, Department of Industrial Policy and Promotion, stated that our regulatory system has been a hangover from colonial administration, and it is unfortunately assumed that wisdom resides with those in power.
The process of consultation with stakeholders is extremely weak and is captured by those who are relatively privileged, resulting in ignoring the voice of the marginalised.
He stressed, that there is a need to create a transparent and publicly accessible inventory of regulations and institutionalise practices like cost benefit analysis in letter and spirit to take into account perspectives of all stakeholders. Only then, it will enable inclusive and sustainable regulatory framework.
Arun Maira, former Member of Planning Commission said that we are living in a paradigm in which men, machine, and formality are given preference and other stakeholders are expected to meet their standards.
For ease of living, a change is paradigm is needed to focus on women, nature, and informality. This can happen if this we deeply listen to such marginalised stakeholders in the language they speak and understand their perspectives.
It was also pointed out that there is a need to review and implement recommendations of different expert committees on bureaucratic and administrative reforms to shorten the distance between policy makers and citizens.
The webinar was attended by close to 50 participants and was first in series of webinars by CUTS International and SKOCH Group on building a narrative for reimagining a better regulatory architecture.
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