Turning seven decades of regulatory cholesterol into compliance reforms is not an easy task. Bringing several ministries together to decriminalise imprisonment clauses in the laws administered by them is even more difficult. As a result, despite a reformist Prime Minister Narendra Modi’s political conviction and the governing coalition’s legislative intent to turn India’s business laws into catalysts for economic growth and job creation that envisions a US$10 trillion GDP, the Jan Vishwas (Amendment of Provision) Bill, 2022 falls short of expectations. The Bill needs to be seen as the start of a long journey, not the destination; it is the first step, not the last; it is not a job well done, but a task that has just begun. If we visualise compliance reforms as a 24-hour day, the Bill ticks for about half an hour or 31 minutes. This Bill is an inadequate tool to accommodate corporate refugees from China or unleash domestic animal spirits at a time of global economic implosion. Of the 42 Acts of Parliament that the Jan Vishwas Bill engages with, little more than half, or 23 Acts, impact ease of doing business; the rest either affect ease of life or influence institutional structures. When placed within the larger context of business laws, the 23 Acts are a fraction of the Union compliance universe comprising 678 laws: That’s less than one in 29 or 3.4 percent. Of the 186 compliances proposed for decriminalisation in the Bill, 113 or three out of five, pertain to doing business. Again, when contexed within the 5,239 imprisonment clauses in the Union laws’ armoury, it amounts to about one in 50 clauses or 2.1 percent.

If an inspector is unable to collect a sample from the factory dealing with hazardous substances because the manager cannot provide assistance, the five-year imprisonment term is being proposed to be decriminalised with a fine of up to INR 5 lakh.

The top five acts by the number of compliances proposed to be decriminalised are: The Merchant Shipping Act, 1958; The Environment (Protection) Act, 1986; The Air (Prevention and Control of Pollution) Act, 1981; The National Housing Bank Act, 1987; and the troika of The Prevention of Money Laundering Act, 2002, The Collection of Statistics Act, 2008, and The Legal Metrology Act, 2009. Together they propose to decriminalise 73 out of 113 imprisonment clauses. The Merchant Shipping Act, 1958, leads the surge, with 22 compliances proposed to be decriminalised. These include clauses for forging documents or fraudulently working as a seaman; desertion; and fraudulent alteration or destruction of log books. The Environment (Protection) Act, 1986 proposes to decriminalise 12 clauses, The Air (Prevention and Control of Pollution) Act, 1981 ten, The National Housing Bank Act, 1987 eight, and seven clauses each in three Acts—The Prevention of Money Laundering Act, 2002, The Collection of Statistics Act, 2008, and The Legal Metrology Act, 2009. In the Environment (Protection) Act, 1986, inadvertent compliance breaches, such as being unaware of excess discharge of pollutants under Sections 7 and 9 that currently carry an imprisonment of five years and a fine of INR 1 lakh is being proposed to change to the decriminalisation of the breach with a fine that can range from INR 1 lakh to INR 15 lakh. Likewise, if an inspector is unable to collect a sample from the factory dealing with hazardous substances because the manager cannot provide assistance, the five-year imprisonment term is being proposed to be decriminalised with a fine of up to INR 5 lakh. The Bill also proposes to decriminalise six clauses in the Information Technology Act, 2000. These include Section 33 which provides for penalty in case of failure to surrender license; Section 67C which provides for preservation and retention of information by intermediaries; and breach of confidentiality and privacy under Section 72. Above all, it proposes to remove Section 66A, which provides for punishment for sending offensive messages through a communication service—this follows a 24 March 2015 Supreme Court order that struck down Section 66A.

The Bill aims to “amend certain enactments for decriminalising and rationalising minor offences to further enhance trust-based governance for ease of living and doing business.”

One law of the imprisonment clauses which has been a pain point for business, is the Legal Metrology Act, 2009. Here, the Jan Vishwas Bill proposes to decriminalise four sections—Section 25 (use of non-standard weight or measures); Section 27 (manufacturing of non-standard weight or measures); Section 28 (making transactions in contravention of the prescribed standards); and Section 31 (non-production of documents). Another pain point has been the imprisonment clauses under The Boilers Act, 1923, under which two imprisonment clauses, under Section 22 (reporting an accident) and Section 23 (illegal use of a boiler), are proposed to be decriminalised. Among the clauses in laws not pertaining to doing business or employer compliances that have been listed for decriminalisation are Section 41L of The Food Corporation Act, 1964; Section 38 of The Warehousing Corporations Act, 1962; Chapter 10 of The Indian Post Office Act, 1898; and Section 41 of The Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016. The intention of the Bill is razor-sharp. It includes glamorous keywords to push its Statement of Objects and Reasons, such as “minimum government maximum governance” and “trust-based governance”. The Bill aims to “amend certain enactments for decriminalising and rationalising minor offences to further enhance trust-based governance for ease of living and doing business.” Further, the Bill recognises India’s place in the global economy. It talks about making “India the most preferred global investment destination by boosting investor confidence,” and recognises the “fear of imprisonment for minor offences” as a factor hampering the growth of the business ecosystem and individual confidence. It further strengthens its arguments by seeking to reduce the judicial burden: “Settlement of large number of issues, by compounding method, adjudication and administrative mechanism, without involving courts, will enable persons to remedy minor contraventions and defaults, sometimes committed unknowingly by them, and save time, energy and resources.”

If we take the 534 imprisonment clauses from Union labour laws out of the equation—as those reforms are already happening as 29 Union laws are consolidated under four Labour Codes—we are left with 4,705 imprisonment clauses.

But between the intent to reform and the proposed Bill, there seems to be a deep void of unexplained lack of political confidence. If we focus on ease of doing business, there are 5,239 imprisonment clauses that come under the ambit of the Union government. If we take the 534 imprisonment clauses from Union labour laws out of the equation—as those reforms are already happening as 29 Union laws are consolidated under four Labour Codes—we are left with 4,705 imprisonment clauses. Of these, if the proposed Bill is decriminalising just 113 clauses, it shows a legislative caution that doesn’t befit either the politics of the day or the actions of a reformist government. The Narendra Modi government has embraced reforms right from the first few months of its existence, with the Jan Dhan Yojana and self-certification in place of affidavits and attestations in August 2014. It has since then continued to push the reforms pedal harder by legislating Aadhaar in 2016, the Insolvency and Bankruptcy Code from 2016 to 2021 (with six amendments), introducing the goods and services tax in 2017, repealing obsolete laws in 2015, 2018, and 2019, and even attempted agricultural reforms in 2020. It has powered these reforms with a ground-zero focus through direct benefit transfers. It has catalysed a new financialisation of the economy, with a payments system that’s the best in the world. So, holding back on compliance reforms, which can demolish the corrupt, rent-seeking, and colonial Inspector Raj just as the 1991 reforms under Prime Minister Narasimha Rao demolished the Quota-Permit Raj, is beyond surprising. The government is cognisant of the matter. The decriminalisation of clauses through amendments to the Companies Act, 2013 introduced in Parliament by Minister for Corporate Affairs Nirmala Sitharaman, for instance, is a benchmark—16 compliances were shifted to an in-house adjudication mechanism in the 2019 amendment; another 18 through the 2020 amendment; for another 11 compliances, imprisonment was removed in the 2020 amendment. This decriminalisation drive needs to be replicated across other non-labour laws. The Food Safety and Standards Act, 2006 and Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 carry 470 imprisonment clauses. The Mines Act 1952 and Coal Mines Regulations, 2017 has 216 imprisonment clauses. The Regulations and Guidelines on Biosafety of Recombinant DNA Research and Biocontainment, 2017 has 207 imprisonment clauses. The Mines Act, 1952 and Oil Mines Regulation, 2017 has 170 imprisonment clauses. The Petroleum Act, 1934 and Petroleum Rules, 2002 has 120 imprisonment clauses. The list of reforms is 678 laws long. The Jan Vishwas Bill is a multi-ministry reform. Applying it to 113 clauses across 23 Acts of Parliament is limiting the scope of its expanse, turning it into a showpiece bonsai rather than a shade-giving banyan.

Every constituency impacted by this Bill, from small and medium enterprises to mega corporations, investors to start-ups, workers to entrepreneurs, and companies to the economy, will benefit from this reform.

For those tracking business laws, rules, regulations and compliances closely, this Bill, introduced in Lok Sabha and referred to a Joint Parliamentary Committee (JPC) on 22 December 2022, is a needless testing of the waters when the entire government, from Prime Minister Narendra Modi to Minister of Commerce and Industry Piyush Goyal, who introduced this Bill, is convinced and there is adequate legislative strength in Parliament to convert it into law. Every constituency impacted by this Bill, from small and medium enterprises to mega corporations, investors to start-ups, workers to entrepreneurs, and companies to the economy, will benefit from this reform. Those opposing it—the usual suspects who seek to redistribute poverty rather than wealth created through enterprises or the entrenched and corrupt bureaucracy—are irrelevant to the larger legislative math. Further, the political effort to decriminalise 113 clauses in Parliament will be the same for 4,705 clauses—holding back serves no purpose. As a matter of caution, it is important to understand that it is nobody’s case that all imprisonment clauses must be decriminalised. What is being argued is that every clause needs to be thought through and rationalised: retain the essential, repeal the rest—clauses that impact wilful tax evasion or destruction of environment could be retained, process- or filing-related imprisonment clauses be repealed. The JPC report is expected by the last day of the first week of the second part of the Budget Session, 2023. We urge the members of this Committee to make recommendations that nudge the government to expand the of this fractionally limited Bill, think big in terms of scale, think long in terms of time, demolish bureaucratic capture of self-serving interests, and deliver reforms that have the potential to attract global and domestic capital, unlock the factories that can generate sustainable jobs and create continuing wealth. If it means the passage of the bill spills over from the Budget session to the Monsoon session, so be it—but these compliance reforms must be in tune with the overall reforms momentum that Modi has built over the past eight years.

• Domestic Politics and Governance
• Law and Justice
• India
• Bill
• decriminalisation bill
• Economic
• environment
• GDP
• Jan Vishwas Bill
• Money Laundering Act
• Narendra Modi

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