1st October, 2013
The Editor,
BCAJ,
Mumbai.
Dear Sir,
Re: Overhaul Economic & Tax Laws, Rules and Regulations
One often hears that one of the prime causes of slow Economic Growth is that our Laws, Rules & Regulations are not conducive to promote economic activity. Over the years, we have created such a thick jungle / maze of complicated Laws, Rules and Regulations, notifications and circulars in every area of Economic Activity that one finds it difficult to traverse the same; particularly, small businessmen and entrepreneurs. One really wonders if even various officials who are supposed to administer and implement the Laws, Rules & Regulations, truly understand the same; whether such a thick web is used for causing harassment and enabling extraction.
Every new law has admirable aims like inclusivity, environmental preservation and fair land acquisition. But there is no provision of funds for staff and expertise required to implement the new regulations effectively. This overloads a bureaucracy already collapsing under old commitments. Some district collectors say they have to oversee 3,000 schemes.
Good governance requires simple laws and enough financial resources to administer them. Otherwise, we get unending delay, cynicism and corruption. Don’t confuse this with policy paralysis: that’s a separate problem. Even when policymakers want to proceed, rules and regulations produce delays that are not merely long but cannot even be quantified or provided for.
Yes, we need rules sensitive to inclusion and the environment. But they must also be designed for compliance within reasonable, predictable periods. Uncertainity frightens the Indian investor no less than the foreigner. The most worrying phenomenon is that of Indian investors saying that they would rather invest abroad than in India. To end the investment drought, the Cabinet has often met to clear projects worth lakhs of crores. The very fact that projects galore cannot proceed without Cabinet intervention is a serious structural failure.
In any good system, the Cabinet makes policy, and project-by-project implementation is done by the ministries. If rules and regulations make it impossible for ministries to clear projects, the answer cannot be Cabinet meetings that guillotine the scrutiny process. Rather, the scrutiny process must be overhauled thoroughly so that clearances occur predictably within a fixed time frame, without Cabinet rescues.
RBI Governor Raghuram Rajan says repeatedly that we must slash red tape and unnecessary regulation. Yet, the government keeps coming out with more new laws, rules and regulations. Not a single legislative or administrative effort aims to ruthlessly prune the same.
Time has come to trust our citizens/businessmen and seriously review the jungle of laws, rules and regulations, to unleash the entrepreneurial energies of India’s Citizens. The administrative machinery should be strengthened to catch and punish those engaged in grave illegal acts and wrong doings.
Regards,
Tarun Singhal.
