Trust is a prerequisite and fundamental for democratic governance, still, the colonial rules and regulations cause a trust deficit among entrepreneurs. The linchpin of democratic governance lies in the government trusting its institutions and the ordinary citizenry. As many of the Acts belong to the British Era and are still among the 69,233 compliances that regulate doing business in India, there are 26,134 clauses across the Centre and state governments to put an entrepreneur in jail as a penalty for non-compliance. It plagues India’s business compliance regulation framework, haunting entrepreneurs since pre-independence. In 75 years of Independence, can an entrepreneur hope that in Amrit Kaal, the ‘Jan Vishwas (Amendment of Provisions) Bill 2022’, which is likely to be presented in the coming monsoon session of Parliament, could envisage redefining the regulatory landscape of the country under the ease of doing business reforms?
The Jan Vishwas Bill, 2022, seeks to amend 42 laws only, but there are approximately 400 central laws that have criminal provisions. Still, the amendment in the Bill is missing the quantum of punishment prescribed for minor inadequacies in compliance with the provisions prescribed within the Indian Penal Code (IPC), 1860. For example, non-furnishing monthly details of inward supplies in GSTR-2 forms under the Goods and Services Tax Act of 2017 carry imprisonment of up to five years as is in the case of an assault on a woman under Section 354 of the IPC.
The World Bank’s ‘Ease of Doing Business Report 2020’, ranked India at 63rd position against the 77th rank in 2018. More ease of doing business means more withdrawals or relaxing of regulations, leading to the fear of imprisonment for minor offences and is a major factor hampering the growth of the business ecosystem and shattering the confidence of entrepreneurs. Just imagine how difficult it is for an entrepreneur to survive and thrive when they are vulnerable to thousands of clauses of imprisonment. The criminal provisions lead to a sense of insecurity and hamper investment decisions by potential investors and dampen the entrepreneurial spirit.
Observer Research Foundation’s (ORF) report also reveals that “the total interlinked compliances for the Centre and the state governments for small, medium, and large-sized entrepreneurs are 669, 3109 and 5796 respectively. An average Indian enterprise in the manufacturing sector with more than 150 employees deals with 500-900 compliances in a year that cost nearly Rs 12 to 18 lakh every year and almost two out of five compliances can send an entrepreneur to jail.”
The clauses of criminality for small procedural lapses and minor defaults clog the judiciary and may put adjudication of major offences on the back burner. The decriminalisation of minor offences will certainly not only make lives and businesses easier, but also reduce judicial burden. As per the National Judicial Data Grid, as of March 31, 2023, out of a total of 4.24 crore pending cases, 3.16 crore cases are criminal proceedings.
It can be hoped that the report on the Bill, presented to the Lok Sabha on March 20, 2023, by 31 members Joint Parliamentary Committee (JPC), came across as a timely and affirmative step by the Department for Promotion of Industry and Internal Trade (Ministry of Commerce and Industry), proposing to reduce the burden of over 39,000 compliances across 42 laws and decriminalisation of 3400 legal provisions with monetary penalties. Out of these 42 laws, 30 are directly linked to the Industry and Trade, administered by 19 Ministries/Departments.
The Jan Vishwas Bill proposed to decriminalise minor offences by imposing monetary penalties under certain Acts like The Industries (Development and Regulation) Act, 1951, which was framed for industrial development and regulation of several activities. If any statement or information is believed to be false in any book, account, record, declaration, return or another document to maintain or furnish, is punishable with imprisonment for up to three months. It is proposed to omit the imprisonment term.
The Trade Marks Act, 1999, relating to trademarks, provides for the registration and better protection of trademarks for goods and services for the prevention of fraudulent marks. Falsely representing a trademark as registered, is punishable with imprisonment up to three years, with a fine, or with both. Amendment in the Bill proposed a penalty of up to Rs one lakh.
The Environment (Protection) Act, 1986: Whoever fails to comply with the provisions of this Act, is punishable with imprisonment up to seven years with a fine up to Rs one lakh. It is proposed that imprisonment for minor lapses shall be replaced with heavier penalties.
The Information Technology Act, 2000: It provides legal recognition for transactions carried out using electronic communication and storage of information with government agencies. Sending offensive messages causing annoyance, inconvenience, insult, criminal intimidation, enmity, hatred or ill will to the recipient, is punishable with imprisonment for three years with a fine. The Bill proposed imprisonment of up to one year or a fine up to Rs one crore or both. Breach of confidentiality and privacy is punishable with imprisonment up to two years, with a fine up to Rs one lakh, or both. Now it is proposed in the Bill with a penalty of Rs 5 lakh.
The Food Safety and Standards Act, 2006: If any person who manufactures for sale or stores or distributes or imports any article of food which is unsafe, shall be punishable with imprisonment of up to six months and also with a fine of up to Rs one lakh. Now imprisonment for three months with a fine up to Rs three lakh is proposed. If any food manufacturer, sells, stores, distributes or imports any article of food without a licence, he shall be punishable with imprisonment of up to six months and also with a fine of up to Rs five lakh.
WAY FORWARD
Hopefully, the amendment in the Jan Vishwas Bill will further speed up rationalising criminal clauses and ensure that businesses would operate without fear of imprisonment for minor, technical or procedural lapses. Effective and efficient business regulations are vital to trim down corruption and unnecessary red tape should be eliminated. It is hoped that bringing all business reforms under single overarching legislation, and infusing dignity to an entrepreneur is the key to economic growth and a job creator at large.
The writer is vice-chairman, Sonalika group, and vice-chairman (Cabinet Minister rank) of Punjab Economic Policy and Planning Board). The views expressed in this article are those of the author and do not represent the stand of this publication.
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