New Delhi (India), April 7: The government has been initiating and rolling out many policy measures and reforms to achieve the vision of a USD 5 trillion Indian Economy by the year 2025. Realizing that implementing reforms and being self-reliant are the critical factors to achieving the aspiration, the Centre, through various ministries, government departments and Indian regulators, has issued relevant notifications and circulars making India attractive investment destinations, pushing make in India, ease of doing business and catalyse growth to achieve the Vision along with being Aatmanirbhar Bharat. Despite COVID being a significant disrupter, the Government has provided the required impetus through reforms that can bring the desired transformation.
Introduction of the real estate regulator RERA, GST rollout, Insolvency & Bankruptcy Code 2016, faceless assessment in Income tax, ease of working and relaxation for start-ups, Covid relaxations for borrowers and Corporates, etc. are some of the measures taken by the Government in its pursuit to make India into a vibrant economy. Financial inclusion is a primary concern addressed by the introduction of PM Jan Dhan Yojana, which accelerated the banking process for as many as 45 crore beneficiaries who have banked so far with a balance of ₹163,631.38 crores. The scheme can be labelled as one of the most successful campaigns globally.
Recovering from non-performing assets was a critical challenge before the banking system despite the constitution of DRT, implementation of CDR& Joint Lender’s Forum, and introduction of Sarfaesi. A new tool, IBC, was introduced, wherein Indian banks and financial institutions straddled with high NPAs could knock on the doors of NCLT for resolution and thereby recover Rs. 2.5 trillion as of June 2021. Further, the capitalization of banks amounting to Rs. 3.10 lakh crore in the last 5 years has given stability to public sector banks. Mergers of PSU banks involving 13 PSU banks resulted in 4 large PSU banks, resulting in consolidation, better utilization of resources and providing a platform to be globally competitive. SME and MSME were supported by extending the emergency credit line to the tune of Rs. 3lakh crores during the pandemic. These, some of the few reforms in the banking sector, have paved the way for ensuring financial stability.
The insurance sector also witnessed reforms, the most notable being allowing foreign direct investment from 49% to 74% to enable better capital gearing and interest from foreign investors, omission of concept on Indian owned and controlled through the relevant notification by IRDA, which was a grey area and open to varied interpretation and disputes, the introduction of Aadhar based E-KYC along with video authentication thereby making the process of insurance simpler. Further, the launch of PMJJBY scheme has changed the landscape of insurance. PMJJBY has have been amended to ensure claims are settled within 7 days of intimation from banks. In the motor insurance segment, the allowing of pay as you use has reduced premium costs. In the health insurance segment, standardization of plans to include mental illness, COVID 19, telemedicine, etc, under the scope of indemnity has been a welcome step. These modifications have resulted in and will continue to facilitate increasing the outreach and making the process simpler.
MCA, not to be left behind, has continuously been coming out with various notifications and circulars to ensure ease of doing business and accomplish the vision of the Government. SPICe+ and Agile PRO was launched, which is the next-gen web form. One person company was initiated wherein today, approximately 40000 companies are registered. Strengthening of SFIO was another measure to deal with fraud. Converting public limited companies to private limited companies and striking off companies have been made simpler. CSR guidelines have been amended to ensure that such allocations are effectively utilized and include COVID-19 needs. The decriminalization of penal codes under the Companies Act was a significant step. In COVID times, guidelines were issued to ensure that board meetings, EGM and AGM were not disrupted by allowing discussions through Audio-Visual means / Video conferences. Fast track processes for mergers and acquisitions were also issued to hasten the process. Measures taken by MCA during the pandemic times have shown how a department can be ahead of the curve. The Competition Commission of India (CCI) also introduced a pre-filling consultation to resolve issues of companies before filing. CCI announced the Green channel to expedite approval of mergers and acquisitions that fall into specific categories. This step has brought about transparency and faster disposal of proposals.
Good and Service Tax (GST) replaced and dispensed off many indirect taxes, including sales tax, service tax, purchase tax, excise duty etc. This enactment was attempted in 2002 but could not carry through due to political will. GST bill required getting the consensus of state governments which was an uphill task. After GST was introduced, there were multiple challenges in the initial implementation, which is natural when such a mega reform. However, the centre recognized and pushed the necessary procedures and continuous transformations in the administrative setup, technological synchronization and spreading awareness of the act and rules. GST collection as of Feb 2022 was approximately ₹ 13.33 lakh crores. Administratively GST has evolved since its introduction in 2017, which would be a continuous process.
In the direct tax space, the faceless assessment was introduced in 2020, which is another welcome step. The announcement of Vivad se Vikas scheme to settle disputes is a positive step towards addressing the concerns of the Department and the assessees. Expansion of the scope of TDS and TCS to widen the tax base is a needed move to enhance the collection. Abolition of dividend distribution tax and incentives for domestic manufacturing companies are also a few of the notable changes benefitting the corporates.
Mis-selling in the real estate sector affected small home buyers. Promising and not delivering to home buyers was a common phenomenon of builders that had broken real estate investors’ confidence. RERA was introduced to regulate the sector and do away with such malpractices. Swacch Bharat, Aayushman Bharat, Aatmanirbhar Bharat, Gift City, Pradhan Mantri Awaas Yojana, Disinvestment of AirIndia, etc. are a few other reforms that will provide impetus and stimulate economic growth. Niti Aayog and Invest India have also contributed immensely by handholding global companies and making India a better investment destination.PM Gati shakti recently announced that the union’s budget aims to integrate multi-mode connectivity. This initiative will enable last-mile connectivity.
The Indian Government has introduced many path-breaking reforms and measures to become globally competitive and relevant. Many initiatives are just about unfolding. It is a well-established fact that continuous reforms will show results post a horizon of 3 to 5 years. The success of reforms also lies in part played by the various stakeholders and the efficient & effective use of the platforms utilized in nation-building.