Enhancing Economic Freedom for Growth

In a bold move to bolster India's medium-term growth prospects, the finance ministry has emphasized the importance of enhancing economic freedom for individuals and small businesses. This strategy focuses on leveraging internal engines and domestic levers of growth, with a particular emphasis on the economic freedom of individuals and organizations to pursue legitimate economic activities.

Deregulation as a Catalyst for Efficiency

By reducing excessive regulatory burdens, governments can help businesses become more efficient, reduce costs, and unlock new growth opportunities. The Economic Survey highlights that regulations increase the cost of all operational decisions in firms, suggesting a need for a streamlined regulatory environment.

Challenges and Opportunities Ahead

Despite several policies and initiatives implemented over the last decade to support MSMEs, challenges in the regulatory environment remain. The Survey points out that regulatory compliance burdens hold back formalization and labor productivity, with many firms choosing to remain small to avoid regulatory scrutiny.

A Three-Step Process for State-Level Reforms

The Survey outlines a three-step process for states to review regulations for cost-effectiveness, including identifying areas for deregulation, comparing regulations with other states and countries, and estimating the cost of each regulation on individual enterprises. This approach aims to lay the foundation for the next round of reforms, focusing on liberalizing standards and controls, setting legal safeguards for enforcement, reducing tariffs and fees, and applying risk-based regulation.