Content
- Ease of Doing Business: India’s Ongoing Regulatory Transformation
- Interlinking of Rivers and Major Irrigation Projects in India
Ease of Doing Business: India’s Ongoing Regulatory Transformation
Concept and Significance
Meaning and Scope
- Ease of Doing Business (EoDB) refers to quality of regulation, procedures, and institutions affecting firm lifecycle—entry, operation, and exit—aimed at lowering transaction costs, boosting competitiveness, and enabling formalisation and investment.
- It covers business registration, taxation, trade facilitation, construction permits, insolvency, and contract enforcement, where simpler rules improve productivity, investor confidence, and global value chain integration for sustained high growth.
Relevance
- GS-2 (Polity & Governance):
Regulatory reforms, decriminalisation of laws, ease of compliance, cooperative federalism (BRAP), e-governance (NSWS, PARIVESH), rule of law & tax certainty. - GS-3 (Economy):
Investment climate, FDI inflows, GST formalisation, MSME credit, logistics & trade facilitation, competitiveness, business environment reforms.
Constitutional and Legal Foundations
Constitutional Basis
- Article 19(1)(g) guarantees freedom of trade and business subject to reasonable restrictions; EoDB reforms reduce excessive controls while preserving public interest, safety, and environmental safeguards.
- Seventh Schedule divides powers on industry, labour, and land; hence EoDB depends on cooperative and competitive federalism, visible in BRAP and state-level deregulation initiatives.
- Article 265 mandates tax by authority of law; therefore tax certainty, stable rates, and predictable dispute resolution form legal backbone of an investment-friendly EoDB regime.
Governance and Administrative Transformation
Trust-Based Regulation
- Shift from inspector-raj to faceless, digital, risk-based governance reduces discretion, corruption, and delays, while focusing enforcement on high-risk cases and rewarding compliant firms with faster clearances.
- Jan Vishwas Act 2023 decriminalised 183 provisions across 42 Acts; proposed 2025 amendments cover 288 more, converting minor offences into civil penalties and promoting proportional, business-friendly regulation.
- Task Force on Compliance Reduction (2025) targeted land, construction, labour, and utilities; over 47,000 compliances reduced, digitised, decriminalised, or removed, lowering regulatory burden across States and UTs.
Economic Impact
Investment and Formalisation
- India attracted about USD 748 billion FDI during 2014–25, a 143% rise over previous period, indicating improved policy stability, digital governance, and regulatory simplification supporting EoDB.
- Active registered companies increased from 1.55 lakh (2020–21) to 1.98 lakh (2025–26), nearly 27% growth, reflecting higher formalisation, entrepreneurship, and compliance-friendly environment.
- GST base expanded from ~60 lakh (2017) to over 1.5 crore (2025), showing deeper formalisation, digital compliance, and reduced cascading, though small-firm compliance costs remain debated.
Budget 2026–27 EoDB Reforms
Tax Certainty
- MAT reduced to 14% and made final tax, improving predictability, reducing disputes, and aligning India with simpler corporate tax regimes that prioritise certainty over complex exemptions.
- Integrated assessment and penalty orders, lower pre-deposit from 20% to 10%, and no interest on penalties during appeal reduce adversarial tax administration and improve business cash flows.
- Decriminalisation of technical defaults and graded prosecutions ensure proportionality, lowering fear of criminal action for procedural lapses while retaining deterrence for serious violations.
Trade and Customs
- Single digital window and Customs Integrated System (CIS) unify approvals, documents, and payments, reducing dwell time and logistics costs, crucial for export competitiveness and GVC participation.
- Expansion of AI-based non-intrusive scanning and risk management aims near-universal container scanning at major ports, improving security while expediting low-risk cargo movement.
- AEO and trusted importer systems enable factory-to-ship clearance and 30-day duty deferral, operationalising “clear first–pay later” and supporting just-in-time manufacturing.
Investment Facilitation
- PROI investment limit raised from 5% to 10% (overall 24%) deepens capital markets, improves liquidity, and diversifies investor base, though macro-prudential oversight remains necessary.
- MAT exemption for certain non-residents and capital-gains treatment for buybacks reduce ambiguity, aligning India with globally predictable cross-border taxation norms.
Digital Single-Window Ecosystem
Platforms
- NSWS integrates 32 Central Departments and 32 States, covering thousands of approvals; over 8.29 lakh approvals granted, significantly reducing duplication, delays, and information asymmetry.
- PARIVESH 3.0 digitises environmental clearances using dashboards and AI support, improving transparency and predictability, though ecological safeguards must remain robust.
- e-Gram Swaraj improves transparency in local planning and finances, indirectly supporting rural enterprises and decentralised economic activity linked with Ease of Living.
Sectoral Structural Reforms
Finance and Insurance
- RBI consolidation of 9,000+ circulars into 238 Master Directions improves clarity, reduces regulatory clutter, and enhances compliance certainty for regulated entities.
- Insurance amendments allowing up to 100% FDI, simpler approvals, and lower capital norms deepen insurance penetration and attract long-term capital.
MSME and Credit
- Credit Assessment Model enabled 3.96 lakh MSME loans worth ₹52,300+ crore (2025) using digital footprints, improving speed, objectivity, and credit access for small firms.
Labour
- Four Labour Codes replacing 29 laws introduce single registration, returns, deemed approvals, and 300-worker threshold, improving flexibility but raising concerns over worker security.
Social and Environmental Dimensions
Balanced Regulation
- EoDB must balance investor convenience with labour rights, consumer protection, and environmental sustainability, since excessive deregulation risks social costs and regulatory capture.
- Removal of restrictions on women’s employment in several states promotes gender inclusion and higher labour-force participation, supporting SDG-5 and demographic dividend.
- Fast digital clearances require strong appraisal to avoid ecological harm; green EoDB integrating ESG norms aligns growth with climate commitments.
Challenges and Gaps
Key Issues
- Implementation asymmetry, local capacity gaps, and bureaucratic inertia limit uniform EoDB benefits, especially for MSMEs outside major industrial regions.
- Residual concerns over policy unpredictability and retrospective changes still influence investor sentiment despite reforms.
- Decriminalisation without strong civil enforcement may weaken deterrence in labour and environmental compliance.
Way Forward
Reform Priorities
- Shift toward outcome-based regulation, digital audit trails, and strong ex-post enforcement with minimal prior approvals.
- Strengthen district-level EoDB via D-BRAP, capacity building, and legally enforceable service-delivery timelines.
- Integrate EoDB with green growth, skilling, and logistics reforms for sustainable, employment-intensive competitiveness.
Interlinking of Rivers and Major Irrigation Projects in India
Concept and Rationale
Meaning and Objectives
- Interlinking of Rivers (ILR) involves transferring water from surplus to deficit basins through canals and reservoirs to improve irrigation, drinking water supply, flood moderation, and regional water security.
- Envisioned under the National Perspective Plan (NPP, 1980), ILR seeks basin-level optimisation of water resources to address spatial and temporal variability of monsoon-dependent flows in a climate-stressed country.
Relevance
- GS-1 (Geography & Society):
River systems & basin geography, monsoon variability, regional disparities, displacement & R&R issues. - GS-3 (Environment):
EIA process, ecological flow concerns, biodiversity impacts, sustainability of inter-basin transfers under climate change.
Institutional and Legal Framework
Constitutional and Federal Context
- Water is a State subject (Entry 17, State List), but inter-State rivers fall under Entry 56, Union List, enabling Parliament to regulate and develop inter-State rivers in public interest.
- Article 262 empowers Parliament to adjudicate inter-State water disputes; ILR requires strong consensus-building and legally robust water-sharing agreements among riparian States.
Institutional Architecture
- National Water Development Agency (NWDA) prepares Feasibility Reports (FRs) and DPRs, forming technical backbone for ILR planning and basin assessments.
- Special Committee for Interlinking of Rivers (SCILR) and Task Force for ILR (TFILR) provide platforms for States to examine technical, environmental, and social dimensions before implementation.
Status of ILR Programme
Overall Progress
- Out of 30 identified ILR links under NPP, FRs for 26 links and DPRs for 13 links are completed, indicating gradual but selective progress in a complex federal and ecological context.
- No ILR project pertains to UT of Jammu & Kashmir, reflecting basin geography and hydrological feasibility considerations within the NPP framework.
Implementation Stage Projects
- Ken–Betwa Link Project (KBLP) is the only priority link under implementation, estimated cost ₹44,605 crore, with about ₹39,317 crore central support, signalling high fiscal and political commitment.
- Ken–Betwa aims to irrigate 10.62 lakh ha, provide 194 MCM drinking water, and generate 103 MW hydro + 27 MW solar, targeting Bundelkhand’s chronic water stress.
- Polavaram Irrigation Project, including Godavari–Krishna link, received ₹20,658 crore central assistance, with large irrigation, drinking water, and ~960 MW hydropower benefits for Andhra Pradesh.
- North Koel Project (Bihar–Jharkhand) has approved cost ₹2,430.76 crore, central share ₹1,836.41 crore, irrigation potential 1,14,021 ha, and revised completion target June 2026.
Economic and Developmental Significance
Agriculture and Irrigation
- ILR projects expand assured irrigation, reduce monsoon risk, enable crop diversification and higher productivity, and support income stability for farmers in drought-prone regions.
- Large command areas (often in lakh hectares) can reduce groundwater over-extraction and stabilise rural economies if integrated with micro-irrigation and efficient water management.
Water and Energy Security
- Projects provide drinking and industrial water (hundreds to thousands MCM), supporting urbanisation and industrial corridors in water-stressed regions.
- Many links integrate hydropower generation, adding renewable capacity and multipurpose value to storage and transfer infrastructure.
Governance and Administrative Dimensions
Clearances and Appraisal
- Every ILR project undergoes Environmental Impact Assessment (EIA) during FR/DPR stages, assessing impacts on ecology, forests, wildlife, and riparian communities.
- Statutory environmental and wildlife clearances are mandatory under prevailing laws, reflecting legal safeguards against unchecked hydraulic engineering.
Cost Sharing and Agreements
- Cost-sharing between Centre and States is project-specific, negotiated individually, which can slow progress but respects fiscal federalism and beneficiary-pays principles.
- Implementation proceeds only after inter-State agreements and MoAs, highlighting dependence on political consensus and cooperative federalism.
Social and Ethical Dimensions
Equity and Displacement
- Large reservoirs and canals can cause displacement, livelihood loss, and cultural disruption among local and tribal communities, raising ethical and R&R challenges.
- Ensuring equitable intra-basin and inter-basin distribution is critical to avoid perceptions of water appropriation by politically stronger regions.
Environmental Dimensions
Ecological Concerns
- Inter-basin transfers may alter natural flow regimes, sediment transport, and aquatic biodiversity, potentially degrading downstream ecosystems and deltas.
- Climate change creates uncertainty about what constitutes a “surplus basin”, risking overestimation of transferable water in future hydrological scenarios.
Challenges and Criticisms
Key Issues
- High capital costs (tens of thousands of crores) raise questions of cost-effectiveness compared to decentralised water management, watershed development, and demand-side efficiency.
- Inter-State disputes, lengthy clearances, and land acquisition delays slow execution, making ILR a long-gestation and politically sensitive programme.
- Experts caution against technocratic optimism, arguing that basin management and local conservation may yield higher returns per rupee.
Way Forward
Reform Priorities
- Adopt basin-wide integrated water resources management (IWRM) combining ILR with watershed development, aquifer management, and water-use efficiency.
- Strengthen scientific hydrological assessments under climate variability, revisiting surplus-deficit assumptions periodically.
- Ensure robust R&R, ecological flows, and participatory decision-making to align ILR with sustainability and constitutional values of equity.
