1. Short Description
India’s top auditor warns that excessive regulations are stifling small business growth, calling for urgent simplification and digitization to boost competitiveness.
2. Read Time
3 minutes 45 seconds
3. Main Article
In a significant address to government and industry leaders, India’s Comptroller and Auditor General (CAG), K Sanjay Murthy, issued a stark warning: the regulatory burden on the nation’s vast MSME sector is a major drag on economic expansion. Speaking at a consultative meeting for an ongoing ease of doing business audit, Murthy argued that complex, multi-layered compliance requirements are impeding competitiveness and slowing industrial growth. His critique underscores a critical challenge for emerging economies, where well-intentioned policies can create unintended bottlenecks for the small businesses that form the backbone of the economy.
Murthy outlined a four-pillar strategy essential for meaningful reform: simplification of rules, widespread digitalization of processes, decriminalization of minor compliance lapses, and the outright elimination of redundant laws. He emphasized that the effectiveness of business reforms depends not just on policy design but on seamless coordination between central, state, and local governments. “The real test of reforms lies in the last-mile outcomes,” Murthy stated, highlighting that the CAG’s audit aims to assess whether systems are actually delivering promised benefits to entrepreneurs on the ground.
The CAG’s pan-India horizontal audit of the MSME ecosystem, covering 2021-22 to 2025-26, represents a proactive shift toward outcome-oriented oversight. By focusing on service delivery and compliance bottlenecks, this audit seeks to generate actionable insights for policymakers. The goal is to move beyond intent and create a more predictable, transparent, and facilitatory environment. For MSMEs, this could mean less time navigating bureaucratic red tape and more resources dedicated to innovation, productivity, and scaling their operations, ultimately driving broader inclusive development.
4. Short Summary
India’s CAG has identified excessive regulatory complexity as a key barrier for MSME growth, advocating for simplification, digitalization, and better policy coordination. An ongoing nationwide audit aims to provide data-driven insights to reduce the compliance burden, enhance the ease of doing business, and unlock the sector’s full potential for industrial growth and job creation. The focus is on translating policy intent into tangible last-mile outcomes.
