India’s deregulation efforts through laws like the Jan Vishwas Acts aim to simplify compliance and shift toward a trust-based governance model.

Background

• Regulatory Mindset: India’s regulatory mindset developed from the pre-1991 socialist ethos (License Raj), where the State saw itself as the “master” and citizens/businesses as “subjects.”
• Culture of Control: The government’s historical priority was control and maintaining strict discipline, leading to laws drafted on the assumption that businessmen were “by default thieves.
• Current Issue: New laws continue to carry this old mindset by emphasising compliance without autonomy. 

About the The Jan Vishwas Act

• Objective: Improve Ease of Doing Business by simplifying procedures and replacing jail time for minor offenses with fines, reducing fear and increasing trust.
• Critique: Seen as administrative housekeeping; does not address structural regulatory issues.

True Deregulation and Structural Freedom

• Shift from Control to Freedom: True deregulation requires breaking the mentality of control and ensuring regulation does not enhance government power.
• Create Structural Freedom: Regulation should provide structural freedom by setting clear boundaries within which businesses can operate freely.

Concept of Dispersed Knowledge (Frederick Hayek)

• Limits of Central Planning: Frederick Hayek argues that knowledge is dispersed and no central authority can know everything.
• Failure of Command Systems: A command-and-control system run from the Centrefails because it cannot respond to complex and varying local market conditions.

Way Forward

• Implement Regulatory Impact Assessment (RIA): Mandatory assessment of costs and alternatives for every new rule; laws without RIA considered invalid.
• Introduce Sunset Clauses: Legislation should carry automatic expiry periods, ensuring that laws continue only after a mandatory review and explicit renewal.
• Codify Scattered Notifications: Consolidate fragmented notifications into thematic regulatory codes, leveraging AI/ML for efficiency.
• Create Regulator Report Cards: Public dashboards showing compliance timelines, inspection frequency, and error rates to ensure accountability.
• Citizen-Centric and Flexible Laws: Frame laws that balance risk and freedom, presume citizens act in good faith, replace upfront permissions with transparency-based penalties, and remain adaptive, allowing operational rules to respond to local needs.

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Conclusion

The purpose of deregulation is to discipline the State, not the citizen. Legitimacy rests on clarity in law rather than the force of enforcement.

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