As a litigating lawyer, I am trained to think logically and apply the existing law to the facts presented to me. As a corporate lawyer, I am trained to apply the existing facts to the framework of the law. As an ethicist, I am driven to inject a moral credo into any governmental policy and challenge it, if it is based on mere practicalities. I cheekily answered a bureaucrat the other day to his constant refrain on being practical – the word ‘practical’ depends on what one ‘wishes to practice’.
Budget 2025 has rolled out a slew of initiatives to take India to the next level but has it helped to ease doing business? But, before we analyse that aspect, let us first look at how our lives have undergone a sea-change making it easier to live – truly the barometer of domestic India aiming for the skies.
The Constitution @ 75 – momentous years of Republic saw many an accomplishment as stipulated below:
• Through har ghar nal se jal launched in 2019, 80 per cent of the rural households have a tap connection today, from 18 per cent in 2019 (WHO estimates saving 55 million hours daily, which were otherwise used up for water collection).
• Cheap handsets with internet facilities and gigabytes of data, improvising connectivity across the length and breadth of the country, have saved valuable travel time, facilitating online education and, of course, showcasing sadhus in selfies at Mahakumbh, bringing them out of their meditative bliss.
• Pradhanmantri Gram Sadak Yojana (launched in 2000), has achieved in building 94 per cent of the roads planned, thereby facilitating access from place A to place B.
• Vande Bharat trains, an alternative to flights, is another boon that has led to a 20 per cent reduction in air-traffic, thereby making the common man/woman feel not so common.
• United Payments Interface (UPI) has become a benediction for small payments (I just bought a Dairy Milk worth Rs75 the other day, because the vendor couldn’t break a Rs500).
• Swiggy and Zomato orders have become food of the Gods for the tired single worker reaching home at 10 pm.
• Ayushman Bharat Jan Arogya Yojana has gone one up on the National Health Service of Britain in terms of affordable medical treatment, which may be considered the biggest feat because jaan hai to jahaan hai.
• Piped gas replacing LPG cylinders is more economical and user-friendly.
• E-commerce boom has brought products to the doorstep, facilitated by the surge in issuance of Credit Cards.
• Green vehicles have improved the Air Quality Index, which is yet another help for good health.
• Trading Apps and OTT platforms are ensuring that the hard worker makes money and is entertained.
• Travel has become easy because of the quick issuance of the passports, facilitated by Passport Kendras.
None of the above would have been possible without several five-year plans and/ or budgets and/ or yojanas over the past few decades. In the past few years, the annual budgets have been the cynosure of all eyes because that charts out the blueprint of the next whole year and a few more than that cumulatively. Budget 2025 boasts of several props to boost further the infrastructural initiatives, to enrich the burgeoning middle-class and to broaden the tax-base. The budget rests over Rs1 lakh crore in the pockets of the tax-payer by making incomes up to Rs12.75 lakh tax-free and shifting the highest tax slab of 30 per cent to Rs24 lakh, from the existing Rs15 lakh. Life-saving medicines are to cost less, in addition to imported bikes and EVs including imported jewellery due to a cut on import duty. The senior citizens would be blessing the FM because of the hike in TDS exemption from the current Rs50,000 to Rs1,00,000. Boosting the real estate sector is also welcome because of the exemption to two self-occupied properties instead of one. To surge the Global Capability Centres in Tier II cities would mean job creation and invite investment in areas that have been deprived of liquid infusion. An outlay of Rs1.5 lakh crore for 50-year interest-free loans as capital expenditure to various states will surge the infrastructural development, thereby decongesting Tier I cities. Simplifying red tape and enhancing the business environment is writ large, thereby easing compliance from those-who-don’t-trust the government, thereby sending the message that the government-trusts-you! What a breath of fresh air – trust first, scrutinize later! My corporate fraternity sees it as jejune but my legal fraternity terms it as legally perspicacious (obviously because everyone is innocent until proven guilty!)
More benefits have been given to MSMEs by revising the classification criteria, which would mean a bigger job creation and long-term growth. The target is the middle-class (but obvious), which is not able to get the bang for their buck as public schools or hospitals are still out of reach – rampant with corruption. Start-ups will be availing of another Rs10,000 crore through the Fund of Funds. And, the Kisan Credit Card limit is now Rs5 lakh, instead of the earlier Rs3 lakh. Entrepreneurship is given a fillip to make India gradually a manufacturing hub, while agriculture will be receiving a boost, so as to ensure that every piece of arable land produces something and the farmer is happy.
All the above are steps in the right direction! But, look at the vision of the prime minister (and perhaps dreams of all of us), which is to see India among the top three global economies. A necessary pre-condition to that goal is that we have to become a manufacturing hub, thereby increasing the value of the rupee vis-à-vis the dollar/euro/pound, which stands at grotesquely low exchange rate today. That can happen only when you have FIs running into billions, which again is dependent upon the Ease of Doing Business. With a byzantine maze of laws, some medieval and some that can flummox even a paleontologist, the foreign investor is certainly not booking the next flight. The PM is no prestidigitator, who has tricks up his sleeve. Several budgets with foresight, grassroots implementation and straightforward legislations with little room for ingenious lawyers to manoeuvre are going to help get that elusive bagful from the foreign investor.
More benefits have been given to MSMEs by revising the classification criteria, which would mean a bigger job creation and long-term growth
The Department for Promotion of Industry & Internal Trade (DPIIT), the nodal department, oversees the Ease of Doing Business, whose objective is to establish and sustain a business environment conducive to smooth functioning. India scores a miserable 63rd rank in the World Bank’s Doing Business Report (DBR).
DPIIT has formulated a Business Reforms Action Plan (BRAP), wherein all the states and Union Territories are assessed on the basis of reforms implemented by them on designated parameters. To streamline the existing regulations and processes thereby eliminating unnecessary requirements and procedures, BRAP has encapsulated single window systems, online building permission system, inspection reforms, labour reforms, etc. DPIIT also co-ordinates with ministries/departments and states/UTs for initiatives to boost business.
The key focus areas of the initiatives to take place are simplification of procedures related to applications, inspections, filing records, rationalisation of legislative provisions, digitisation of government processes and decriminalisation of procedural or trivial faux pas.
A simplified tax code would invite chary investors and make the India story more credible
"The Jan Vishwas (Amendment of Provisions) Act 2023, which received the Presidential Assent on 11 August 2023, decriminalised 183 provisions of 42 Central Acts administered by 19 ministries/departments. Also, it has helped in rationalising criminal provisions and ensuring that citizens and the government departments alike operate without fear of imprisonment for trivia procedural oversights/defaults. According to the current budget, Jan Vishwas Bill 2.0 will decriminalise more than 100 provisions in several laws. Additionally, the Investment Friendliness Index of States to be set up this year will gauge the report card of performance and where discrepancies or deficiencies need to be fixed.
What reinforces my confidence is that the FM has spoken about introducing a new Income Tax Act that will be half as long as the six-decade-old one. As the Companies Act 1956 was revised into a more tenable Companies Act 2013, this revised tax regime is much needed, so as to ensure that there is more domestic compliance. That would mean more money to the exchequer, less interest burden on any borrowings by the government. A simplified tax code would invite chary investors and make the India story more credible. Reducing tax litigation, where the government is the biggest litigant, would show to the foreign investor that the Indian bureaucrat no longer wants its hands covertly into the cookie jar. A revamp of the current bilateral investment treaties is a must, as India has lost a few major arbitrations, such as Cairn Energy and Vodafone. A few nations are accepting the current bilateral handshake, but we need more.
It is music to the ears when we hear that the finance ministry, in consultation with the Reserve Bank of India, is simplifying the Foreign Exchange Management Act regulations. Sector-specific FDI limits, when relaxed, have increased the foreign exchange investment and a further review will only ensure the removal of unnecessary restrictions and consequent increased foreign investment. The xenophobic tendency needs to give way to more global consortiums. A draft bill seeking 100 per cent foreign investment in the insurance sector is also on the cards, where restrictions on appointments of key managerial personnel and repatriation of dividends shall be relaxed. Needless to add, the three key insurance legislations – Insurance Act 1938, the Life Insurance Corporation Act 1956 and the Insurance Regulatory & Development Authority Act 1999 – shall undergo crucial amendments to facilitate operational freedom to the insurer in opening overseas offices, which is a must.
Some bizarre laws have been fortunately junked or in the process. The Indian Motor Vehicles Act 1914 stipulated that an inspector in Andhra Pradesh must have well-brushed teeth and, if he has a pigeon chest, knock knees, flat feet or hammer toes, he will be disqualified. A toll tax for boats ferrying passengers across the river Ganga cannot be more than two annas is now as redundant as the annas themselves.
In conclusion, a repeal of more obsolete laws plus a revamp of some applicable legislations like the Income Tax Act and the Foreign Exchange Management Act is important, if one has to have more impactful budgets because, unless you ease doing business, you don’t sit on the Global Table, and we certainly do not want ‘Viksit Bharat 2047’ to be a pipedream.
And yes, although a bit conservative in my approach, I somewhat agree with John Stuart Mill: “Although it is not true that all conservatives are stupid people, it is true that most stupid people are conservative”.