After Survey call, Budget focuses on regulatory reforms

A day after the Economic Survey 2024-25 made a case for deregulation as one of the means to boost domestic growth, the Union Budget 2025-26 has proposed a review of both financial and non-financial sector regulations that are expected to help businesses perform better with lesser compliances.

Union Finance Minister Nirmala Sitharaman in the Union Budget tabled on Saturday announced that a High-Level Committee for Regulatory Reforms will be set up for a review of all non-financial sector regulations, certifications, licenses, and permissions. “The committee will be expected make recommendations within a year,” she said.

The objective is to strengthen trust-based economic governance and take transformational measures to enhance ‘ease of doing business’, especially in matters of inspections and compliances. States will be encouraged to join in this endeavour.

The Minister also announced that under the Financial Stability and Development Council, a mechanism will be set up to evaluate impact of the current financial regulations and subsidiary instructions. “It will also formulate a framework to enhance their responsiveness and development of the financial sector,” she said.

On Friday, the Economic Survey 2024-25 had also urged the government on the need for deregulation and “getting out of the way” to allow businesses to focus on their core functions.

Experts welcomed the move and said it could be effective with proper implementation. Sanjiv Malhotra, Senior Advisor, Shardul Amarchand Mangaldas & Co noted that ease of doing business 2.0 was a strong theme in yesterday’s economic survey. “The economic survey harped on the need for deregulation and FM has actioned this by announcing setting up of a high-level Committee for regulatory reform in non-financial sector. This is to identify bottlenecks and harassment (especially in matters of inspection and compliances). It is a welcome move and with a one-year timeline for this initiative, I hope we will see tangible results very soon,” he said.

The government has in the past too set up several committees to review regulations and enable ease of doing business. While the report of the Company Law Committee, a government appointed panel, to review the Companies’ Act is still under finalisation, several such high-level committees have given their recommendations on improving ease of doing business and light touch regulations.

The Financial Sector Legislative Reforms Commission was constituted by the Finance Ministry in March 2011 to comprehensively review legislations governing the country’s financial system. Similarly, a committee was set up under former Sebi Chairman M Damodaran in August 2012 by the ministry of corporate affairs for Reforming the Regulatory Environment for Doing Business in India.