Date: 22/04/2023

Relevance: GS-2: Functions and responsibilities of the Union and the States.

Key Phrases: Motor Vehicles Act, 1988; Indian Forest Act 1927; Pharmacy Act, 1948, Bureaucratic Red Tape, Archaic Labor Laws, World Bank Ease of Doing Business Report.

Context:

• India has a complex legal framework for businesses, and there are many criminal provisions in Indian laws that can have significant implications for businesses and investments.
• These laws are designed to protect the interests of the government, consumers, and society, but they can also pose challenges for entrepreneurs and businesses in complying with them.

Key Highlights:

• Trust is vital for democratic governance, but archaic regulations lead to a trust deficit among entrepreneurs.
• India has 69,233 compliances regulating business, and 26,134 clauses that can put entrepreneurs in jail for non-compliance.
• The Jan Vishwas Bill 2022, likely to be presented in the upcoming Parliament session, seeks to amend 42 laws administered by 19 ministries and rationalize criminal clauses.
• Some of the laws that will be amended are the Motor Vehicles Act, 1988; Indian Forest Act 1927; Pharmacy Act, 1948.

Main Areas of Concern for Entrepreneurs:

• Bureaucratic Red Tape :
  • Cumbersome process of obtaining licenses and permits from multiple agencies is a major hurdle for entrepreneurs.
  • Simplifying and streamlining the regulatory framework, eliminating redundant clearances, and providing a single-window clearance mechanism for all licenses and permits can address this issue.
• Lack of Supportive Ecosystem :
  • Despite government initiatives, entrepreneurs struggle to access capital, find talent, or navigate complex regulatory requirements.
  • Measures such as tax incentives, easier access to credit, and mentorship programs can support entrepreneurs at every stage of their journey.
• Archaic Labor Laws :
  • Rigid labor regulations have led to low levels of formal employment, informalization of the workforce, and low productivity.
  • Streamlining labor laws and providing more flexibility in hiring and firing can create a more conducive environment for businesses to operate and encourage more job creation.
• Slow Pace of Judicial Reforms :
  • Lack of clarity and transparency in business transactions due to the slow pace of judicial reforms.
  • Timely resolution of commercial disputes, protecting intellectual property rights, and creating a favorable environment for contract enforcement can build investor confidence and attract more foreign investment.

What role Jan Vishwas Bill can play?

• Ease of Doing Business and Regulatory Burden:
  • India ranked 63rd in the World Bank Ease of Doing Business Report 2020, up from 77th in 2018.
  • More ease of doing business means more withdrawals or relaxing of regulations leading to the fear of imprisonment for minor offences.
  • The criminal provisions lead to a sense of insecurity and hamper investment decisions.

• Reducing Burden On Judiciary:
  • An average manufacturing firm with over 150 employees deals with 500-900 compliances annually costing nearly ₹12-18 lakh and two out of five compliances can lead to imprisonment.
  • The decriminalisation of minor offences will not only make lives and businesses easier but also reduce judicial burden.
  • As per the National Judicial Data Grid, as of 31st March 2023, out of a total of 4.24 crore pending cases, 3.16 crore cases are criminal proceedings.
• Decriminalization of Minor Offences:
  • The Jan Vishwas Bill aims to decriminalize minor offences by imposing monetary penalties under certain Acts like The Industries (Development and Regulation) Act of 1951 and the Trade Marks Act of 1999.
  • The Bill proposes penalties for offences such as falsely representing a trade mark as registered or selling unsafe food, replacing imprisonment with monetary fines.
• Rationalization of Business Regulations:
  • The JPC report proposed reducing the burden of over 39,000 compliances across 42 laws and decriminalizing 3,400 legal provisions with monetary penalties.
  • 30 of the 42 laws are linked to industry and trade and administered by 19 Ministries/Departments.
  • The Jan Vishwas Bill proposes to rationalize criminal clauses and ensure businesses can operate without fear of imprisonment for minor, technical or procedural lapses.

Criticism of the Bill:

• Increased Political Influence and Corruption:
  • There is no disbelief in the fact that decriminalization lessens the burden on the judiciary by transferring matters to various government departments, which can lead to corruption by using political influence.
  • To get a particular work done, any business can use its political influence and pressurize the authority to grant or remit any such situation which is advantageous to the corporation in question.
  • This transfer of power from the courts to the agencies can be detrimental to the functioning of the business in the long run.
• Penalty not always an adequate measure:
  • The Bill aims to decriminalize certain compoundable offences under the company law by removing the criminal provisions and letting go with just a fine.
  • This may help in the ease of doing business, but this will be a huge scope for the corporate giants to take such situations for their own advantage.
  • A company having a turnover in crores of rupees will not find it difficult to pay a penalty of an amount that is even in lakhs. This may be termed by them as the cost of doing business.

Conclusion:

• A single overarching legislation for all business reforms could infuse dignity into entrepreneurship and foster economic growth and job creation.
• Effective and efficient business regulations are vital to trim down corruption and eliminate unnecessary red tape.
• It can be seen from here that the Decriminalization Bill is made by having faith in the individuals and the corporates that they will respect the laws and abide by them, hence the name Jan Vishwas Bill.
• On one hand, the Bill promotes individual liberty and the ease of doing business while on the other it can promote corruption and ignorance.
• To keep such a situation in check, the framers of the Bill must see alternatives whereby the penalty is not the ultimate solution to a legal offence

Source: The Hindu BL

Mains Question:

Q. Explain the Jan Vishwas Bill 2022 and its significance in the context of ease of doing business in India. (150 Words).