Page 213 - ES 2020-21_Volume-1-2 [28-01-21]

196 Economic Survey 2020-21 Volume 1

Similarly, several other requirements, which prevented companies from adopting ‘Work from
Home’ and ‘Work from Anywhere’ policies have also been removed. This has significantly
liberalized the regulation for the BPO sector. (See the details in Chapter No 9 of Volume 2)

6.36 The need for process simplicity extends to the institutional architecture as well. The ultimate
source of supervision is public scrutinty and public leadership. Since it is not possible for the
public to scrutinize everything, the focus should be on a strong but limited state, rather than
weak and all pervasive state. This is in line with government’s idea of ‘Minimum Government
and Maximum Governnance’. Since Independence, a plethora of autonomous bodies had
proliferated. There is a need to prune them consistently not just from a cost perspective but in
order to maintain transparency, accountability and efficient supervision. In this spirit, in the last
year several organizations including All India Handloom Board, All India Handicrafts Board,
Cotton Advisory Board and Jute Advisory Board have been closed. Similarly, the governement
approved merger of four of its film media units, namely Films Division, Directorate of Film
Festivals, National Film Archives of India, and Children’s Film Society, India into the National
Film Development Corporation (NFDC) Ltd.

6.37 Finally, there is a case for enacting Transparency of Rules Act to end any asymmetry
of information regarding rules and regulations faced by a citizen. This was initially proposed
in Chapter 8 of Economic Survey 2016-17 Volume 2. The reform solves for the problem that
rules frequently change and often the citizen has to follow a long paper trail of circulars and
notifications to know the current requirements. Under this act, all departments will need to
mandatorily place all citizen-facing rules on their website. Officials will not be able to impose
any rule not explicitly mentioned on the website clearly. Further, all laws, rules and regulations
will have to be presented as an updated, unified whole at all times. This will bring transparency
and simplify the understanding of regulations.

CHAPTER AT A GLANCE

¾ It is not possible to have complete regulations in a world which has uncertainty as it is
not possible to account for all possible outcomes. The evidence, however, shows that
India over-regulates the economy. This results in regulations being ineffective even with
relatively good compliance with process.

¾ This chapter argues that the root cause of the problem of over-regulation is an approach
that attempts to account for every possible outcome. This is illustrated by a study of the
time and procedures needed to voluntarily close a company in India, even when there is
no outstanding dispute or litigation.

¾ Both economic theory and evidence shows that in an uncertain and complex world,
it is not possible to write regulations that account for all possible outcomes. This
makes discretion unavoidable in decision-making. The attempt to reduce discretion by
having ever more complex regulations, however, results in even more non-transparent
discretion. The solution is to simplify regulations and invest in greater supervision
which, by definition, implies willingness to allow some discretion.