Government allocations and subsidies should be done not on the basis of regulatory inputs but on the basis of outputs because that will bring in performance based on merit, curb corruption and lead to optimum use of government resources, he said.
Coming down heavily on regulatory governance in sectors like education, Shourie said this has done immense damage to the system because regulators use the power they have to indulge in massive corruption, as indicated by the cases of corruption against heads of Medical Council of India, Council of Architecture,All India Nursing Council and Dental Council.
A compounder of the Nursing Council of India was caught while taking bribe of Rs 5 lakh, and later the CBI found he had assets worth Rs.200 crore.
Shourie revealed that in all, there were 13 regulators in the education sector and 36 in the finance sector, which has only led to more corruption and downslide in standards.
There were unreturned loans worth Rs 35,000 crore in the regulated banking sector, he said, highlighting the ill effects of the regulatory nature of governance.
Giving an example of the pitfalls of subsidy as it is given today, Shourie said in Alwar district, Indian Oil Corporation found that the intake of subsidised kerosene came down by 40% when it gave vouchers instead of actual kerosene to the beneficiaries because when actual kerosene was given it was being used by scamsters to adulterate diesel.
Shourie said labour laws were primarily responsible for the reduction of apprentices in India, which had a direct impact on growth. He added there are 20 million apprentices in China and 14 million in Germany.
"India needs change if it is to capitalise on its inherent strengths and the new prime minister will have to fight the enemies of change if he is to usher in a new era."