Jan Vishwas (Amendment of Provisions) Bill, 2026 - A Step Towards Trust Based Governance in India
The Jan Vishwas (Amendment of Provisions) Bill, 2026 builds on the Jan Vishwas (Amendment of Provisions) Act, 2023, which decriminalised 183 provisions across 42 central laws. The 2026 Bill follows this up by proposing amendments to 784 provisions across approximately 80 central Acts, decriminalising 717 provisions and rationalising penalties in 67, with the aim of shifting minor regulatory violations from the criminal justice system to a civil–administrative framework and promoting trust-based governance.
Background and Rationale
The 2026 Bill has been brought in as the second, more expansive phase of reforms initiated by the 2023 Act. The new Bill extends the reforms to a wider set of areas, including financial regulation, transport, food safety, mining, electricity, and municipal governance in Delhi. Its central aim is to reclassify a wide range of minor and technical violations as civil wrongs to be addressed through monetary penalties, advisories, and administrative adjudication instead of imprisonment and criminal trials.
The Economic Survey 2025–26 underlines the stakes of such regulatory reform by characterising the micro, small, and medium enterprises (MSMEs) as the backbone of India’s industrial economy, contributing about 35.4 percent of manufacturing output, 48.58 percent of exports, and 31.1 percent of GDP, and employing more than 32 crore people across 7.47 crore enterprises. In a context where MSME credit has been the primary driver of industrial credit growth in the first half of FY26, but many smaller firms continue to face binding constraints in accessing formal finance and securing timely payments, thus, easing regulatory fear and the risk of criminal prosecution for minor compliance lapses is not a narrow legal-technical adjustment but a macro-economic necessity.
Conceptually, the Bill lies at the intersection of three policy priorities: reducing unnecessary criminalisation of economic and procedural activity, easing pressure on an already over-burdened judiciary, and signalling a more predictable, business-friendly regulatory environment. It reflects a broader policy approach visible in company law and tax reforms: wilful fraud and high-impact harm should remain criminally punishable, while good-faith mistakes and technical lapses are better handled through civil and administrative mechanisms.
Core objectives
The Bill’s primary objective is to “decriminalise or rationalise offences and penalties” in roughly 80 central Acts. Its design centres on three interlinked goals:
∙ reducing criminalisation of minor procedural and technical violations; ∙ diverting routine regulatory disputes away from criminal courts; and ∙ building an enforcement regime that is facilitative but still credible for both businesses and citizens.
These goals extend beyond narrow economic efficiency as the Bill also addresses “ease of living,” particularly in municipal administration and local governance in Delhi, where petty offences and outdated provisions have long resulted in friction between citizens and frontline state agencies.
Design Features
The Bill’s core thrust is to decriminalise or rationalise offences and penalties in central laws that govern routine economic and administrative activity across sectors such as finance, transport, food safety, mining, electricity, and Delhi’s local governance framework.
Key design features include:
∙ Decriminalisation and shift to civil penalties: A wide set of offences that previously attracted imprisonment, alone or with fines, are proposed to be converted into civil penalties. This is visible, for instance, in proposed amendments to the Drugs and Cosmetics Act, 1940 and the National Highways Act, 1956.
∙ Removal of imprisonment provisions: In multiple statutes, the Bill removes imprisonment altogether and replaces it with enhanced monetary penalties, making fines the primary enforcement tool. This is evident in parts of the Electricity Act, 2003, where conduct earlier punishable by short jail terms would now invite only financial sanctions.
∙ Deletion of selected offences: Certain low-impact or largely symbolic offences are proposed to be deleted on the ground that criminal law is a disproportionate response. Illustrative examples include giving false fire alarms under the Delhi Police Act, 1978 and some minor municipal lapses under the Delhi Municipal Corporation framework.
∙ Periodic revision of penalties: To preserve deterrent value as the economy grows, the Bill introduces an automatic revision mechanism under which fines and civil penalties
introduced or revised by it will rise by 10 percent every three years. This is intended to minimise the need for repeated legislative amendments just to update penalty amounts.
∙ Graduated enforcement and warning-based compliance: Several laws are redesigned to favour advice and correction over immediate punishment, especially for first-time or low-severity breaches. For example, in the Apprentices Act, 1961 and the Legal Metrology Act, 2009, regulators are expected to use advisories, warnings, and improvement notices before imposing monetary penalties.
∙ Administrative adjudication framework: The Bill designates adjudicating officers and sector-specific appellate authorities to handle inquiries and impose penalties, replacing the criminal courts for such matters. This administrative route is meant to deliver quicker, more specialised, and less adversarial resolution of routine violations, while serious misconduct - fraud, major threats to public safety, and high-impact harm, remains within the criminal law domain.
Collectively, these features seek to move minor regulatory violations out of the criminal process and into a flexible administrative framework without weakening the state’s ability to prosecute genuinely serious offences.
Shift Toward Trust-Based Governance
The Bill is explicitly framed within an objective of “trust-based governance,” where citizens and firms are not treated as presumptive offenders for procedural or technical mistakes. This is in line with the NITI Aayog’s position that criminal sanctions should be reserved for fraud, deliberate wrongdoing, and high-impact harm, whereas good-faith errors should be addressed through civil and administrative measures.
The Economic Survey 2025–26 also emphasises the need for digital governance and predictable regulation to lower compliance costs and enable MSMEs to participate more fully in global value chains, and therefore, the Jan Vishwas Bill, 2026 can be seen as part of a broader effort to replace fear-based, criminal enforcement with a more facilitative, data-driven regulatory state.
However, critics warn that swapping imprisonment for higher fines does not automatically build trust. If administrative authorities enjoy wide discretion, operate with limited transparency, or weak checks and balances, the system may become penalty-driven rather than
facilitative, with businesses treating fines as routine costs and enforcement agencies viewing penalties as a revenue source.
Impact on Ease of Doing Business
From an economic governance perspective, the Bill is presented as a major reform to improve India’s business environment. Official narratives and industry responses to the 2023 Act already framed decriminalisation of minor offences as a signal that India is moving towards a more predictable, balanced and less punitive regulatory regime. Extending similar reforms across more statutes is expected to reduce the perceived risk of criminal liability for technical breaches in sectors such as transport infrastructure, utilities, and manufacturing.
A crucial anticipated benefit is the reduction of judicial backlog. By diverting routine regulatory disputes from criminal courts to administrative mechanisms, the Bill aims to cut litigation costs and free up courts to focus on serious offences and complex commercial disputes. If implemented well, this could help accelerate resolution of minor cases and improve perceptions of contract enforcement and regulatory predictability, areas where India has traditionally lagged.
However, the impact on transaction costs will depend heavily on how the new adjudicatory architecture works in practice. Inconsistent approaches by adjudicating officers, unclear timelines, or overly informal, relationship-driven procedures could convert the new system into an additional bureaucratic layer rather than a genuine simplification, particularly for smaller firms.
The Jan Vishwas reform forms a part of a broader effort to reduce the compliance burden on MSMEs and make regulation more facilitative. It is suggested that the next phase of reform goes beyond decriminalisation to include simpler filings, technology-enabled compliance, and reduced penalties for minor errors, all of which are especially relevant for smaller enterprises with limited compliance capacity. In parallel, the NITI Aayog has highlighted the need for States to adopt Jan Vishwas-type reforms, signalling that decriminalisation is increasingly being treated as a wider regulatory governance strategy rather than a one-off legislative exercise. This matters because MSMEs are affected not only by the fear of prosecution, but also by repeated filings, procedural complexity, and uneven enforcement; therefore, the success of Jan Vishwas will depend on whether it lowers both legal risk and administrative friction.
Implications for MSMEs and Ease of Living
For MSMEs, the move away from criminalisation of technical non-compliance is especially significant as they are central to manufacturing, exports and GDP, but still face structural constraints in credit and payments. Many small firms lack dedicated compliance staff and struggle with complex filings, evolving standards, and sector-specific regulations. The Economic Survey 2025-26 notes that despite MSME credit becoming the primary driver of industrial credit growth, about 27 percent of MSMEs still identify access to finance as their biggest obstacle, with micro and women-owned enterprises particularly constrained by collateral requirements and payment delays. Replacing the threat of prosecution for delays, documentation gaps, or first-time errors with graded penalties and corrective notices can reduce regulatory anxiety and make formalisation less daunting.
A more predictable enforcement regime can also indirectly support MSME access to finance. When minor infractions no longer escalate into criminal proceedings or prolonged litigation, reputational risks fall, and lenders may be more willing to extend credit, particularly when combined with reforms that promote formal lending to smaller enterprises.
At the same time, there is an evident distributional concern. If penalties are not calibrated to business size and turnover, a flat monetary sanction may be easily absorbed by a large corporation but crippling for a small firm. Against this backdrop, a penalty architecture that is insensitive to firm size and financial capacity risks aggravating structural vulnerabilities that the Economic Survey already flags in the MSME ecosystem, even if it removes the threat of imprisonment. Combined with limited legal awareness and information asymmetries, this could deepen inequalities: large, well-resourced firms may be better placed to understand, comply with, and contest enforcement actions, while MSMEs and transitioning informal enterprises remain exposed to disproportionate penalties and selective enforcement.
On the “ease of living” front, decriminalising petty municipal offences, simplifying property-related compliance in Delhi, and pruning outdated local penalties can reduce everyday friction in citizen–state interactions. The Economic Survey 2025–26 notes that Tier-2 cities are increasingly leading the Ease of Living Index 2025, overtaking some metros on quality-of-life indicators and governance outcomes, largely on the strength of improved local service delivery and more responsive municipal administration. While the Survey does not attribute these gains to any single law, linking reductions in petty, outdated municipal offences and clearer property-related compliance under the Jan Vishwas reforms to such ease-of-living metrics helps to locate the Bill within a broader trajectory of citizen-centric urban governance reform.
Implementation Challenges and Design Gaps
One of the biggest challenges arising from the 2026 Bill is the magnitude of discretionary power vested in administrative authorities. Adjudicating officers and departmental officials can impose penalties with relatively little statutory guidance on standards of proof, what counts as mitigating or aggravating circumstances, or how procedures should be applied consistently, effectively shifting oversight from the courts to the executive and raising serious questions about accountability, independence, and uniformity in decision-making.
Another challenge is the lack of coherence in penalty design across laws. Similar forms of non-compliance can attract very different penalties depending on the statute, weakening proportionality and complicating compliance planning for entities operating across sectors. Drafting inconsistencies, such as situations where conduct remains an offence but the punishment clause is removed or unclear, create legal ambiguity likely to generate litigation and require judicial or legislative correction.
There are also sector-specific risks in domains such as privacy, consumer protection, environmental regulation, and food safety. Critics of earlier decriminalisation rounds argue that reducing criminal liability in areas with weak enforcement capacity could embolden misconduct, particularly where harm is diffuse and costly for individuals to litigate. Extending decriminalisation into such sensitive sectors without tailored safeguards risks weakening protections for consumers and vulnerable groups unless regulators are simultaneously strengthened and alternative enforcement tools are robust.
Ultimately, the Jan Vishwas Bill should be judged not just by the number of offences it removes, but also by whether it creates simpler procedures, clearer advisories, and more predictable enforcement for citizens and MSMEs alike.
Recommendations for Policymakers and Stakeholders
To realise the Bill’s potential while addressing its design gaps, several steps are desirable:
1. Clarify decriminalisation criteria and mandate periodic review: The government should set clear, cross-sectoral criteria distinguishing minor or technical non-compliance from serious offences that must remain criminal. Criminal liability should be confined to fraud, deliberate wrongdoing, and high-impact harm, and the framework reviewed every three to five years based on enforcement data and evidence of harm.
2. Balance penalty design: Graded or unit-based penalty structures should ensure that similar violations draw comparable sanctions across laws, with amounts calibrated to both the seriousness of the breach and firm size, so fines neither become routine for large companies nor ruinous for MSMEs. The Economic Survey 2025–26’s documentation of MSME financial vulnerabilities provides empirical support for calibrating penalties to firm size and turnover, so that sanctions do not crowd out investment or credit access for smaller enterprises.
3. Bolster procedural safeguards: Statutes and rules should lay down clear eligibility standards, safeguards for independence, and security of tenure for adjudicating and appellate authorities, complemented by basic due-process guarantees such as reasoned, speaking orders, defined timelines, meaningful opportunities to be heard, and appeals that are accessible in cost and procedure. Additionally, regular scrutiny by parliamentary or legislative committees, together with the publication of aggregate data on enforcement actions, would bring greater transparency to the system and make it easier to detect patterns of arbitrariness or bias.
4. Integrate reforms with digital single-window systems: Unified digital compliance platforms should issue standardised advisories, notices, and penalty orders, curb in-person discretion and create a reliable audit trail. Over time, the data they generate can inform targeted capacity-building and more rigorous, risk-based regulatory oversight.
5. Prioritise MSME-focused support and legal awareness: Concise, sector-specific guides explaining decriminalised offences, applicable penalties, and appeal routes should be built into Udyam systems, MSME facilitation centres, and local business associations so smaller firms can navigate the new regime with confidence. Since a significant share of MSMEs still cite finance as their biggest constraint despite targeted schemes, legal literacy and accessible redressal on penalties and compliance need to be integrated into existing MSME support platforms rather than treated as a separate legal domain.
6. Maintain safeguards in safety-critical sectors: In domains such as food safety, environmental protection, and data governance, it is preferable to follow a hybrid approach: minor or first-time breaches should generally invite civil penalties and corrective directions, while repeated or serious violations continue to attract criminal liability. Regulators should track outcomes, and where evidence shows rising harm or weak deterrence, they ought to recommend re-criminalisation or stronger sanctions.
Conclusion
The Jan Vishwas (Amendment of Provisions) Bill, 2026 is a major milestone in India’s attempt to clean up its regulatory landscape, cut back on unnecessary criminal provisions, and make it easier for businesses to operate while still protecting the public interest.
The real outcome of the law will lie in day-to-day practice: whether regulators actually behave in a trust-based, problem-solving manner; whether penalties are applied proportionately rather than mechanically; and whether citizens and smaller enterprises genuinely feel less fear and procedural harassment, or simply find themselves facing a new, more financialised form of regulatory control. Furthermore, the real test of the Jan Vishwas reform is whether it becomes part of a sustained compliance-reduction strategy for MSMEs and not merely a shift from criminal sanctions to heavier administrative penalties.
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