Regulatory cholestrol is a silent tax clogging India’s economy

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Only 25+ of the world’s 2500+ living written languages are read from right to left. India’s citizens are forced to adopt this counterintuitive algorithm when reading our laws. The state reads laws from left to right (Acts to Rules) and has a blind spot about the punishable obligations it creates. Citizens read from right to left (Compliances to Administrative Instruments to Rules to Acts), and their blind spot is often Acts. The administrative state’s proliferation of Non-Act/Non-Rule instruments since independence defies the spirit of our Constitution and undermines a single source of truth for our laws. Three reforms are overdue and urgent.AdvertisementOur Constitution has a simple construct: Parliament makes laws that authorise the government to make rules that must be notified in the Gazette. It imagines only one level of fully transparent subsidiary legislation. The Supreme Court agrees. It is a settled principle that a law cannot become operative without being promulgated or published in some reasonable manner and that citizens must have knowledge (or opportunity to know) the law that applies to them because “secret laws are unconstitutional in a rule-of-law system”.However, our administrative state has invented 19 Non-act/Non-rule instruments (regulations, circulars, master circulars, departmental/ministry directions, office memorandums, public notices, general orders, guidance notes, advisories, press releases, schemes, consultation papers, SOPs, policies, notifications, guidelines, government orders, departments orders and gazettes) through which it implements 41 different types of compliances (mandatory obligations with prescribed punishment). Many are unnotified. Consequently, it is hard to know what to comply with, and in these shadows, obligations become excessive and unnecessary.This proliferation of instruments and compliances is not a conspiracy but has three poisonous costs. The first, unjudicious discretion for 2.5 crore civil servants, breeds corruption. When there is a transmission loss between how the law is written, interpreted, practised, and enforced, civil servants can say with impunity, “show me the person, and I will show you the rule”. The second is anxiety for 140 crore citizens: The lack of a single source of truth for the laws in force means that “digital arrest” moves from unbelievable to plausible, and threats of punishment by government servants are settled bilaterally in cash. The third is mass prosperity. An important driver of the divergence between India’s 128th per-capita GDP rank and 4th total GDP rank is informality — a sense of humour about the rule of law — that creates our crisis of wages (not jobs). Most of our 7 crore enterprises are dwarfs (small and unlikely to grow) rather than babies (small but growing due to higher productivity).AdvertisementAlso Read | To win back foreign investors, India needs tax reformCitizens are not opposed to compliance; they are allergic to confusion. One enabler of this confusion is excessive criminality, targeted by the recent Jan Vishwas Bill. Combined with the Labour Codes, 12,500 jail provisions were removed to reduce litigation, recognise that process should not be punishment, and that fear is a poor substitute for governance. But if citizens don’t know what to comply with, replacing or reducing jail provisions doesn’t solve the problem — it just makes the lottery cheaper. When obligations lie scattered across instruments, clarity becomes accidental, and compliance becomes a treasure hunt. Treasure hunts are great for children, not for societies or economies. The next phase of Jan Vishwas (trusting citizens) should involve three reforms.The first is an inventory deadline: Six months for every central ministry to adopt the recently formulated Jan Vishwas Siddhant (principles), which interrogate compliances and punishments while requiring obligations to arise only from Acts passed or Rules notified. Every central ministry (70+) and department (100+) would have to surface their inventory, then notify, modify, or extinguish many instruments and compliances (our estimate is 10,000+). The objective of this exercise is not Poorna Swaraj; it does not target rules but shadows, ambiguity and overreach.The second reform is structural reimagination. Today, the government publishes Acts, rules, and regulations across the India Code website, the e-gazette, and the physical gazette. Neither is complete; none is digitally legible, and this fragmentation creates uncertainty. Consolidation would involve transferring ownership of the physical gazette from the Ministry of Housing and Urban Affairs to whoever will be accountable for the merged entity. India Code would then become the front-end: A searchable, sortable, filterable, and subscribable 21st-century machine-readable digital repository of all the laws, rules, regulations, and public orders that a citizen or business needs to comply with. It would be digitally secure and time-stamped, with an exhaustive version history. When the government and citizens are reading the same page, corruption will significantly reduce.The third reform is legislative certainty: 12 months from now, the central government should offer a “single-source of truth” guarantee to every citizen and entrepreneur — if the India code website lists the compliance, it must be complied with. If it’s not, it can be safely ignored without fear, favour, or follow-up. This certainty would require either diligent administrative enforcement of the Jan Vishwas Siddhant or the formal passage of a law that articulates, empowers, and enforces the India Code Guarantee.you may likeIndia’s administrative state was once a steel frame. It is now a steel maze at best, and a steel cage, at worst. A recent book by John Straubaugh about the Soviet space programme, titled The Wrong Stuff, a mirror of Tom Wolfe’s The Right Stuff, reminds us how an immense, multilayered Soviet bureaucracy bred corruption and inefficiency and undermined mass prosperity. The USSR tried to compensate for its lack of freedom and innovation by “brute forcing”; yet an omnipotent, omnipresent bureaucracy without accountability and boundaries finally lost legitimacy with citizens.It is hard to put a price on the silent tax of regulatory cholesterol. Our guesstimate is $10,000 per capita GDP since 1991. The proliferation of hundreds of non-act, non-rule administrative instruments whose “brute force” creates thousands of punishable obligations undermines freedom, sabotages prosperity, and is constitutionally the wrong stuff. They must go.Sabharwal and Mathan are are co-founders of Teamlease and Trilegal, respectively