Reforming Governance for Ease of Doing Business
- Globally, potential investors look at a country’s Doing Business Report (DBR) ranking
- Sustained measures taken have resulted in steadily improving India’s position in World Bank’s Doing Business Report rank from 142 in 2014 to 63 in 2019
- This included streamlining processes such as granting of permits and clearance, self-certification, and third-party certification among others.
- The government is working on a mission mode on the next phase of Ease of Doing Business Reforms relating to easy registration of property, fast disposal of commercial disputes, and a simpler tax regime for making India one of the easiest places to do business.
Recent Corporate Law measures to boost Measures for Ease of Doing Business
- In the first phase of decriminalization of Company Law defaults in 2018, 16 compoundable offenses were shifted to an in-house adjudication & penalty mechanism
- Integrated Web-based Incorporation Form – Simplified Proforma for Incorporating Company Electronically Plus (SPICe +) introduced which extends 10 services of different Ministries and one State Government through a single form.
- Databank of Independent Directors launched
- Withdrawal of more than 14,000 prosecutions under the Companies Act, 2013.
- Rationalization of Related Party Transaction related provisions
- Timely Action during COVID–19 to reduce compliance burden under various provisions of the Companies Act,2013 as well as enable companies to conduct Board Meetings, EGMs & AGMs, Rights issue by leveraging the strengths of Digital India
- In 221 resolved cases, 44% Recovery has been achieved since the inception of IBC, 2016
- • Admitted claims amount to Rs. 4.13 Lakh crores
- • Realizable amount is Rs. 1.84 Lakh crores
- Under IBC, 13,566 cases involving a total amount of Rs. 5.01 lakh crores (approx.) have been withdrawn before admission under provisions of IBC till 29th Feb 2020.
Rs 40,000 crores increase in allocation for MGNREGS to provide employment boost
• Government will now allocate an additional Rs 40,000 crore under MGNREGS
• Will help generate nearly 300 crore person-days in total
• Address need for more work including returning migrant workers in Monsoon season as well
• Creation of a larger number of durable and livelihood assets including water conservation assets.
• Will boost the rural economy through higher production.
Health Reforms & Initiatives
Increased investments in Public Health –
• Public Expenditure on Health will be increased.
• Investments in grass root health institutions
• Ramp up Health and Wellness Centres in rural and urban areas.
Preparing India for any future pandemics –
• Infectious Diseases Hospital Blocks – all districts
• Strengthening of lab network and surveillance –
o Integrated Public Health Labs in all districts & block level Labs & Public Health Unit to manage pandemics.
• Encouraging Research–National Institutional Platform for One health by ICMR
• National Digital Health Mission: Implementation of National Digital Health Blueprint.
Further enhancement of Ease of Doing business through IBC related measures
- Minimum threshold to initiate insolvency proceedings raised to Rs. 1 crore (from Rs. 1 lakh, which largely insulates MSMEs).
- Special insolvency resolution framework for MSMEs under Section 240A of the Code to be notified soon.
- Suspension of fresh initiation of insolvency proceedings up to one year depending upon the pandemic situation.
- Empowering the Central Government to exclude COVID 19 related debt from the definition of “default” under the Code for the purpose of triggering insolvency proceedings.
Decriminalization of Companies Act defaults
- Decriminalization of Companies Act violations involving minor technical and procedural defaults (shortcomings in CSR reporting, inadequacies in board report, filing defaults, delay in holding AGM).
- The Majority of the compoundable offenses sections to be shifted to internal adjudication mechanism (IAM) and powers of RD for compounding enhanced (58 sections to be dealt with under IAM as compared to 18 earlier).
- The Amendments will de-clog the criminal courts and NCLT
- 7 compoundable offenses altogether dropped and 5 to be dealt with under alternative framework
Ease of Doing Business for Corporates
- Improvement in rankings in ‘starting a business’ and ‘insolvency resolution’ have contributed to the overall improvement in India’s ranking on EoDB.
- Further key reforms to include –
- Direct listing of securities by Indian public companies in permissible foreign jurisdictions.
- Private companies that list NCDs on stock exchanges not to be regarded as listed companies.
- Including the provisions of Part IXA (Producer Companies) of Companies Act, 1956 in Companies Act, 2013.
- Power to create additional/ specialized benches for NCLAT
- Lower penalties for all defaults for Small Companies, One person Companies, Producer Companies & Start-Ups.
Public Sector Enterprise Policy for a New, Self-reliant India
- India and the world have changed in the last few decades.
- Need for a new coherent policy—where all sectors are open to the private sector while the public sector
- enterprises (PSEs) will play an important role in defined areas.
- Accordingly government will announce a new policy whereby
- List of strategic sectors requiring the presence of PSEs in the public interest will be notified
- In strategic sectors, at least one enterprise will remain in the public sector but the private sector will also be allowed
- In other sectors, PSEs will be privatized (timing to be based on feasibility, etc.)
- To minimize wasteful administrative costs, the number of enterprises in strategic sectors will ordinarily be only one to four; others will be privatized/ merged/ brought under holding companies.