Waiting for legislative action to bring reforms in various sectors is both cumbersome and time-consuming process. What executive measures can be introduced to reform sectors across exports, taxation, small scale industries, labour and infrastructure? Examine. (200 Words)
- (Ficci) has suggested a slew of urgent reforms across sectors, which will not require legislative action.
- The proposed reforms are spread across exports, taxation, and crucial sectors such as small scale, labour and infrastructure.
- According to Ficci, most of these reforms can be addressed by executive action by the respective ministries.
- To boost India’s lagging merchandise exports, Ficci has suggested simplifying the process by which exporters can claim incentive benefits.
- While the government has sought to incentivise exports through interest subvention and the merchandise exports from India scheme (MEIS), exporters have claimed several procedural and implementation difficulties to have made it unusuable.
- The suggested reforms include increasing the time period allowed to exporters to claim MEIS benefits as well as for manually submitting the shipping bill.
- Allowing exporters to self-certify the origin of various goods, which usually take a considerable time, has also been mentioned.
- In labour laws, Ficci has proposed a uniform period of five years across states after which factory licences are required to be renewed. Currently, the period ranges from one to five years.
- It has also recommended fixing a three-year time limit to decide pending cases by the Board for Industrial and Financial Reconstruction under the Sick Industrial Companies Act, 1985, which has pending cases stretching back to 15 years.
- Under the Employees Provident Fund and Employees State Insurance Acts, it has suggested placing a cap on the time duration of records summoned by the inspector for inspection for up to three years before.
- It also urged the government to divest (disinvestment) its stake holding in central public sector undertakings
- To secure urgent infrastructure growth, the setting up of a one-stop shop for handling projects coming up under the public-private partnership mode has been recommended.
- While the government had announced setting up of an institution called ‘3P India’ in 2014, the body has still not been set up.
- Ficci has also called for introducing binding statutory timelines for adjudication of matters relating to indirect taxes. It said the uncertainty in such cases make doing business difficult especially for small and medium enterprises.
- Currently, the Customs Act states tax officials shall have to determine the amount of such duty within one year from the date of notice.
- A provision be made each in the Customs, Central Excise and Service Tax laws that in case a show-cause notice is not adjudicated upon within a specified period from the date of issue, the proceedings shall lapse as if the show-cause notice was never issued
- On cheap steel imports flooding the domestic market,
- it has argued for instituting (introduce ) anti-dumping norms and suggested import duty on all steel products should be raised to 25 per cent in the upcoming Budget.
- It has also called for the customs duty on all steel products be immediately raised to 15 per cent. Currently, the duty on import of long steel ranges from 10 to 12.5 per cent across categories.
Logjam in consecutive parliament sessions, led the govt to come up with executive measures:-
Reforms in export sector:-
– Increasing the time period to claim MEIS benefits.
– Allow manually submitting of the shipping bill.
– Provision to self-certify the origin of various goods, which usually take a considerable time.
Labor reforms:-
– Uniform period across states to renew factory licences (currently range from 1 to 5).
– Fixing timeline to decide pending cases by the Board for Industrial and Financial Reconstruction (currently stretched upto 15 years)
– Need to disinvest PSU.
Taxation reforms:-
– To boost SEZ, invitation to FDIs and high budget allocation, to grow more employment opportunities.
– Repeal of retrospective taxation.
Infrastructural reforms:-
– Setting of 3p-indian institute, to handle effectively projects under ppp mode.
– Revision of DFI( development financial institution) to instil long term investments in infrastructure.
Reforms in Small scale sector:-
– Need to recapitalise MSMEs.
– Provisions to make it women friendly.
Need of the hour to re-evaluate economic sector, with easy and friendly labor laws, strict implementation of anti dumping laws to maintain domestic competition healthier, fast adjudication of financial cases by setting specific tribunals, and fast implementation of GST only then projects like MII and SISI can successful.
Recent Parliament deadlock and the sensitive nature of some sectors have prompted GoI to take executive measures for reform :
1) Export : Foreign Trade Policy(2015-20) which aims to double the export has introduced various incentives to boost export. But, certain reforms such as increasing time period for claiming MEIS benefits, allowing self-certification of origin of goods are required.
2)Texation : Urgent need to either completely get away with the MAT (Minimum Alternate Tax) or reduced to its original rate of 7.5% to revive SEZs (Special Economic Zones) to attract foreign investment, create employment, boosting exports.
In addition, It is high time to get away with the Reterospective texation which has hindered the growth of Make In India campaign.
3) Labour : There is need of uniform period for factory licenses to renew which currently varies from 1 to 5 years. Secondly, there is urgent need to fix the timeline for the pending cases before the Board of Industrial and Financial Reconstruction. Finally, reform the existing labour laws to decrease the incidence of informal employment.
4) Infrastructure : Firstly, to provide single platform dealing with all PPPs under infrastructure sector, urgent need to set up 3P India institution. Secondly, There is urgent need to revive DFIs ( Development Financial Institutions) to make available long term- capital for the infrastructure sector.
However, Resorting to the executive measures and by-passing the legislative procedure as envisaged in our constitution is not a justifiable for the world’s fastest growing economy being the world’s largest democracy. It can damage our image as the most favourable destination as we argue on our unique 4 D’s – Democracy, Demography, Demand and recently added De-regualation.
Such executive measures should be adopted only when Parliament is not in session & economy desperately needs reforms.