A Trust-Based Governance Model

Developed countries generally exhibit greater governmental trust than developing countries. 

• The shift towards trust-based governance is increasingly seen as essential for modern societies including India.
• Developed countries generally exhibit greater governmental trust than developing countries.

About Trust-based Governance Model

A trust-based governance model represents a transformative approach to how governments interact with citizens, businesses, and institutions. 

• Definition: A trust-based governance model is an approach to governing that prioritizes mutual respect, transparency, and accountability between the government and its stakeholders—citizens, businesses, and institutions. 
• Traditional Governance Models: It often operates on the assumption that stringent oversight and control are necessary to prevent misuse and ensure compliance.
• Trust-based Governance Model: It starts with the belief that most actors will act in good faith when given the right environment and support.

Enroll now for UPSC Online Course

Significance of Trust-based Governance Model

The significance of a trust-based governance model lies in its ability to create a more effective, responsive, and sustainable relationship between the government, citizens, businesses, and institutions.  Here are key aspects that highlight its importance:

• Enhanced Efficiency: Trust enhances efficiency, reduces regulatory burdens, and improves societal well-being. 
• Encourages entrepreneurship and Attracts investment: Trust-based systems cut down on paperwork, oversight layers, and red tape, lowering administrative costs and allowing governments to invest in growth and innovation. 
  • A trust-based environment encourages entrepreneurship and attracts investment, driving economic expansion.
• Boost Competitiveness: With fewer regulatory hurdles, businesses can respond more swiftly to market changes, enhancing their global competitiveness and fostering a vibrant, innovation-driven economy.
• Improving the quality of services : Trusting public institutions reduces the need for constant oversight and micromanagement, streamlining service delivery and improving the quality of services provided to citizens
• Foster Risk Taking & Innovation: Trust encourages voluntary compliance and calculated risk taking, fostering innovation and adherence to regulations through a fair and transparent system.
  • A governance model that encourages businesses to innovate without the constant fear of punitive action would foster a culture of experimentation and risk-taking.
• Improves Participation: Trust encourages broader participation in democratic processes, from voting to engaging in policy debates, which strengthens the overall democratic framework.
• Integrate India with Global Standards: India can align itself with global standards, making it a more attractive destination for international businesses and investors. 
  • This would enhance India’s global standing and contribute to its economic integration with the rest of the world.

History & Current Policy Showcasing “Mistrust” in the System

Policies that showcase “mistrust” in the system often reflect a governance approach that assumes individuals, businesses, or institutions may not act responsibly without stringent oversight. Following are the reason and examples:

• Historical Experiences: After independence, when Indians took control, they brought with them a mindset shaped by two centuries of colonial rule. Acculturated to distrust, they perpetuated and amplified this mistrust. 
  • This legacy led to an environment where procedural compliance often overshadowed genuine outcomes, even at senior leadership and bureaucratic levels.
• Multiple Layers of Oversightment: It reflects distrust in employees’ ability to perform duties honestly and competently. 
  • As a result of Historical Experience: Cumbersome regulatory frameworks, extensive paperwork, and multiple layers of oversight have emerged. 
  • These layers include internal and external audits, vigilance cells, anti-corruption bureaus, parliamentary committees, Central Vigilance Commission, Central Bureau of Investigation, Lokpal, Lokayukta  and more. 
  • AIM: These layers, aimed at accountability, reflect deep-seated distrust, in the employees and even in the over-sight mechanisms. 
  • This distrust has further made noticeable the prioritisation of procedures over outcomes.
• Mandatory Document Attestation: In a paper-based bureaucratic system, this requirement adds significant drudgery and cost, especially for the small and the poor, making every transaction cumbersome. 
• OverInformation Asked: Extensive, often irrelevant information asked during applications, based on the presumption that applicants may be hiding something. 
• Processes over outcomes: The emphasis on processes over outcomes is rooted in a belief that individuals cannot act ethically and effectively without strict guidance and supervision.

Check Out UPSC CSE Books From PW Store

Significant Step Towards Trust-based Governance

A significant step towards trust-based governance involves implementing policies and reforms that shift the focus from stringent control and oversight to fostering transparency, accountability, and collaboration:  

• 73rd and 74th Constitutional Amendments of 1992: It decentralised power to local bodies like panchayats and municipalities. 
  • Decentralisation exemplifies trust in local officials’ ability to manage resources and make decisions independently. 
  • Concern: However, the governance culture imbibed by the local bodies was that of distrust seen at central and state levels
• Recent Initiatives: 
  • Affidavits were replaced with self-certification, and many attestations by Gazetted officers or notaries were eliminated. 
  • Streamlining: Application forms were streamlined to one page, and the India-stack’s Open API architecture reduced redundant data requests. 
  • Decriminalization :Over the years, 3,400 legal provisions were decriminalised and over 39,000 compliances were cut. 
  • Green Clearances: Government proposed to expand the scope of single window portal, PARIVESH to provide information to the applicants. 
    • Based on the location of units, information about specific approvals will be provided. 
    • It will enable application for all four approvals through a single form, and tracking of the process through Centralized Processing Centre-Green (CPC-Green). 
    • It has been instrumental in reducing the time required for approvals significantly.
  • Land Records Management: Government proposed that States will be encouraged to adopt Unique Land Parcel Identification Number to facilitate IT-based management of land records as efficient use of land resources is a strong imperative. 
  • Government Procurement: As a further step to enhance transparency and to reduce delays in payments, the Government proposed  a completely paperless, end-to-end online e-Bill System to be launched for use by all Central ministries for their procurements. 
    • The system will enable the suppliers and contractors to submit online their digitally signed bills and claims and track their status from anywhere.
    • To reduce indirect cost for suppliers and work-contractors: The use of surety bonds as a substitute for bank guarantee will be made acceptable in government procurements,
  • Accelerated Corporate Exit: Government proposed Centre for Processing Accelerated Corporate Exit (C-PACE) with process re-engineering
    • It will be established to facilitate and speed up the voluntary winding-up of these companies from the currently required 2 years to less than 6 months. T
  • 5G Production-Linked Incentive Scheme (PLI): As part of the Ease of Doing Business (EODB) a scheme for design-led manufacturing to be launched to build a strong ecosystem for 5G as part of the Production Linked Incentive Scheme.
  • AatmaNirbharta in Defence: Defence R&D will be opened up for industry, startups and academia with 25 per cent of defence R&D budget earmarked. 
    • Private industry will be encouraged to take up design and development of military platforms and equipment in collaboration with DRDO and other organisations
  • An independent nodal umbrella body will be set up for meeting wide ranging testing and certification requirements

Check Out UPSC NCERT Textbooks From PW Store

Building Trust Between The Government And The Businesses Remains A Challenge

Building trust between the government and businesses is more challenging than fostering trust with citizens due to several factors:

• There’s a widespread perception of corruption, which complicates trust-building. 
  • High-profile scams: Some businesses have exacerbated this distrust, leading to a complex and burdensome regulatory environment.
  • India’s regulatory framework: It encompasses 1,536 laws with 69,233 compliances across various levels of government, with new requirements being added frequently.
  • Compliances: Indian businesses, including micro, small and medium enterprises (MSMEs), are subject to numerous compliance requirements under a variety of statutes
    • For Example: Companies Act 2013, the Income Tax Act 1961, the Banking Regulation Act 1949, the Foreign Exchange Management Act 1999, the Employees’ Provident Funds and Miscellaneous Provisions Act 1952, the Payment of Bonus Act 1965, the Factories Act 1948 etc.
• Addressing Diverse Need: Businesses involve numerous stake-holders with diverse needs, making uniform trust difficult to achieve. 
• Complexity Involved: Not all compliances can be done away with. Some regulatory compliances are essential for societal welfare, necessitating distinction between critical and peripheral requirements, which is complex. 
• Cost of Compliance: Businesses in India often spend considerable resources on meeting compliance requirements, ranging from tax filings to environmental regulations. 
  • This not only increases operational costs but also diverts attention from core business activities.

Way Forward

Following Steps must be implemented to ensure a better transitions towards trust-based governance:

• Transparency: It is fundamental in bridging the trust gap between governments and businesses. Embracing technology-based governance: It can facilitate this shift. 
• Leverage Digital Transactions: It can create an audit trail that discourages unethical behaviour and allows real-time identi- fication of misconduct, reducing the need for extensive regulatory procedures. 
• A comprehensive review of compliance requirements is essential: This review should focus on distinguishing necessary from unnecessary requirements, promote self-certification, simplify processes, and leverage digitisation. 
• Reduce Non-necessary Inspections: Inspections and third-party certifications, wherever possible, should be done away with. 
• Redundant and Ambiguous Requirements: Such requirements should be eliminated and the  information already held by government agencies should not be repeatedly requested. 
• Compliance Costs: It should be minimised, and penalties should be swift and effective. 
  • Establishing an online facility, supported by artificial intelligence, would enable businesses to readily check and fulfill compliance requirements specific to them.

Enroll now for UPSC Online Classes

Conclusion

India has made notable progress in trust-based governance, particularly with citizens. It’s time to extend this trust to businesses. By building and maintaining trust, governments can create a foundation for long-term stability, sustainable development, and a stronger, more cohesive society. 

DOWNLOAD PDF