From decriminalisation to discretion: New law to redefine India’s regulatory landscape

The passage of the Jan Vishwas (Amendment of Provisions) Bill, 2026, marks a decisive shift in India’s regulatory philosophy. It seeks to replace fear-driven compliance with trust-based governance. By decriminalising hundreds of minor offences and substituting imprisonment with civil penalties and administrative action, the reform attempts to correct a long-standing imbalance where procedural lapses were often treated with disproportionate severity. The intent is clear: unclog courts, reduce harassment, and create a business environment aligned with a modern economy. Yet, as with all structural reforms, the real test lies not in legislative ambition but in institutional execution and judicial interpretation.

At its core, the reform acknowledges a basic truth: criminal law must be used sparingly. For decades, India’s regulatory architecture blurred the line between mala fide intent and technical non-compliance. Entrepreneurs, especially MSMEs, operated under the constant threat of prosecution for delays or minor infractions. By removing imprisonment for such violations and introducing graded enforcement — advisories, warnings, and monetary penalties — the new framework promises proportionality. This is a welcome correction that aligns with constitutional guarantees of fairness and reasonableness under Article 21, while also strengthening economic freedom under Article 19(1)(g).

However, the reform is not merely about ease of doing business. It also signals a broader recalibration of the State-citizen relationship. The move towards administrative penalties and compounding mechanisms reflects a governance model that prioritises compliance over coercion. In theory, this reduces friction between regulators and stakeholders. In practice, it risks shifting discretionary power from courts to administrative authorities. Without strong safeguards, transparency norms, and accountability frameworks, the danger of regulatory overreach or selective enforcement cannot be dismissed.

Complicating this evolving landscape is the judiciary’s recent posture, particularly in high-value economic offences. The role of the Supreme Court of India in endorsing settlement-driven resolutions, particularly in the Sandesara-Sterling Biotech case, has introduced a parallel dimension to decriminalisation. The Court’s decision to quash criminal proceedings following substantial financial recovery underpins a pragmatic approach: prioritising restitution over prolonged litigation. While this ensures recovery of public funds and reduces judicial backlog, it also raises uncomfortable questions. Does the emerging “pay and settle” model risk creating a two-tier justice system where economic offenders can negotiate outcomes while ordinary offenders cannot?

This tension strikes at the heart of Article 14 - equality before law. If settlement mechanisms become the norm in complex economic crimes without a clear statutory framework, the line between judicial discretion and policy-making begins to blur. One can argue that such precedents may dilute deterrence, particularly in cases involving systemic fraud or public money. Supporters counter that prolonged criminal trials often fail to deliver timely justice or recovery, making pragmatic settlements a rational alternative. Both positions carry merit, but neither can substitute the need for codified guidelines.

From an economic standpoint, the reform is undeniably positive. A less punitive regulatory environment enhances investor confidence, reduces compliance costs, and improves administrative efficiency. For citizens, it removes the stigma and stress of criminal prosecution for minor infractions, making governance more humane. Yet, economic gains cannot come at the cost of regulatory credibility. Deterrence remains essential, particularly in sectors involving environmental protection, financial integrity, and public safety.

The way forward demands balance. Decriminalisation must not translate into deregulation. Clear statutory frameworks for economic settlements, uniform enforcement standards across ministries, and robust judicial oversight are essential to prevent arbitrariness. Serious offences involving intent, fraud, or public harm must continue to attract stringent criminal liability. Equally important is the creation of transparent mechanisms to monitor administrative discretion, ensuring that trust-based governance does not become discretion-based governance.

India stands at a critical inflection point. The shift from punishment to compliance is both necessary and overdue, but it must be anchored in institutional integrity. The success of this reform will depend not on how many provisions are decriminalised, but on how fairly, consistently, and transparently the new regime is implemented.

The writer is an Advocate, Arbitrator & Mediator at the High Court, Lucknow; Views presented are personal.