In a significant move to boost India’s business ecosystem and promote ease of doing business, the Ministry of Commerce and Industry has taken a bold step by setting up a working group to decriminalize laws. The group, comprising representatives from various industry associations, business chambers, legal professionals, and officials of seven ministries, aims to reduce the compliance burden on individuals and businesses. The group also includes representatives from the National Housing Bank, NABARD, and CPCB. The Jan Vishwas (Amendment of Provisions) Bill, 2023, is a crucial legislative initiative that seeks to amend 183 provisions across 42 Acts administered by 19 ministries to achieve these goals.
The Need for Decriminalization
Micro, Small, and Medium Enterprises (MSMEs) play a vital role in the Indian economy, contributing significantly to the GDP. To encourage these enterprises to transition to the formal sector and generate jobs and income, there is a dire need for effective and efficient business regulations that eliminate unnecessary red tape. However, currently, there are a staggering 1,536 laws, resulting in around 70,000 compliances that govern doing business in India. Shockingly, a 2022 report by the Observer Research Foundation (ORF) revealed that among the 69,233 unique compliances that regulate business in India, 26,134 have imprisonment clauses as penalties for non-compliance. These excessive compliances have been burdensome, particularly for MSMEs, creating barriers to the smooth flow of ideas, job creation, wealth generation, and GDP growth. Additionally, the lengthy processing times for obtaining approvals can escalate costs and dampen the entrepreneurial spirit.
The Proposed Solutions
The Jan Vishwas (Amendment of Provisions) Bill, 2023, addresses these issues and proposes several key solutions to foster a more conducive business environment:
- Decriminalization of Offenses: The bill aims to decriminalize 180 offenses across 42 laws covering various sectors, including environment, agriculture, media, industry, trade, and publication. This step will significantly reduce the compliance burden on businesses.
- Replacing Imprisonment Clauses with Fines: The bill seeks to replace imprisonment clauses with monetary fines. This move aims to strike a balance between penalizing non-compliance and not excessively burdening businesses with severe punitive measures.
- Compounding of Offenses: The bill proposes the compounding of offenses in certain provisions, allowing businesses to pay a fine and settle minor violations without facing prolonged legal proceedings.
- Removal of Offenses under the Indian Post Office Act, 1898: The bill aims to remove all offenses and penalties under the Indian Post Office Act, further streamlining the business operations related to postal services.
- Changes in Grievance Redressal Mechanisms: The bill proposes changes in grievance redressal mechanisms and the appointment of Adjudicating Officers for penalty determination. This ensures fair and efficient handling of compliance-related issues.
- Periodic Revision of Fines and Penalties: The bill suggests a periodic revision of fines and penalties, with a 10% increase in the minimum amount every 3 years for various offenses in specified Acts. This measure will ensure that penalties remain relevant and deterrent enough for businesses to comply with regulations.