New Delhi, Feb. 4 -- India recently notified the long-awaited modifications of its labour laws, streamlining outdated and punitive regulations that had raised the cost of doing business and discouraged scale.

As states begin to operationalize the new codes, there is optimism that simpler rules will encourage the formation of new firms, investment and formalization.

As these changes take effect, a parallel and equally consequential part of our reform agenda remains untouched: deregulation of India's urban planning and land-use regulations that are just as archaic and distortionary as our labour laws were.

Like our old labour laws, land regulations raise business costs invisibly but significantly, incentivize informality and inhibit scal...