Economic Times

Compliance reduction & decriminalization of legal provisions will foster ease of doing business

India’s improved rank in the ease of doing businessWorld Bank is a testimony that India is reducing its compliance burden on companies and individuals, thus making business and commercial life easy here. India ranked 142 nd (out of 190 countries) in 2014 and is now well placed at 63 rd in 2022. The aim is to go below 50. This will be a remarkable achievement. This will make India a preferred destination for foreign investment and ensure investors’ and other stakeholders’ confidence. One factor that has significantly contributed to the improved rank is easing of compliance requirements under several legislations. From making it easy to set up a new company, to get licenses/business permits, getting a property registered, paying, or making tax filings and compliances, resolving insolvency, facilitating cross border trade, there has been a sum of many efforts that have added to the rank.

The Government of India surely deserves an applause for its continuous and committed efforts in this direction. The government is serious on two accounts – one, to ease compliance burden; and second, to relax punishments for such non-compliances. To achieve this, the penalties for non-compliances have been shifted from criminal charges (i.e., imprisonment) to monetary fines. It was never right in the first place to have criminal liability to address minor and trivial offences. It instilled fear on companies and its officer of getting imprisoned for such minor offences. This added to India Inc’s difficulties of doing business.

With compliances and penalties being eased, it will not only further enhance India’s rank but will get India a tag of being a preferred destination for foreign capital. In addition, this will reduce the burden on the already burdened judicial system to hear and award criminal punishments.

In continuation in this direction, the Union Budget 23-24 has announced further steps. It has proposed to reduce more than 39,000 compliances under several legislations and to de-criminalise more than 3400 legal provisions. This, according to the Budget, will ensure trust-based governance and unleash the potential of our economy – one of the seven priorities laid out in the Budget.

To achieve this, the Jan Viswas (Amendment of Provisions) Bill, 2022 has already been introduced in Lok Sabha on December 22, 2022 and was referred to the Joint Parliamentary Committee on the same date. It proposes to amend 42 Acts to reduce the compliance burden on individuals and businesses and ensure ease of doing business.

These legislations cover aspects relating to environment protection, agriculture, forest, air pollution, drugs and pharmacy, IPR laws (such as copyright, patents, trademarks and geographical indications of goods), banking companies, motor vehicles, railways and metro rails, cable TV network, Information Technology, prevention of money laundering and so on. Unlike earlier efforts to de-criminalise certain specific and limited Acts such as the Companies Act 2013, this Bill goes very far and wide to move from a criminal punishment regime to a more acceptable monetary fines approach.

Implementation of laws is the bedrock of legal framework. Therefore, there must be fear of non- compliance in the minds of violators. Equally important is punishment must commensurate to the nature of an offence. This will build a conducive and balanced environment of compliances. Imposing too big a penalty for a small offence is not correct, neither is too little for a serious offence. The right balance must be struck. De-criminalisation of trivial offences is a step in the right direction. This will surely ease of doing business in India.

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