Editorial
The UPA Government has finally won the trust vote, and is no
longer dependent on the support of the Communist parties. So far, over the past
few years, it was held out that the Government wanted to usher in reforms, but
that since these were opposed by the Communist parties, these could not be
effected. Now that it is free of its shackles, there are high expectations from
the Government on the reforms front. The Government has given indications of
imminent reforms in the banking, insurance and pensions sectors. These are of
course important parts of the structural reforms necessary to ensure that the
economy continues to grow at a healthy pace, notwithstanding the global
slowdown. One hopes that these reforms will finally see the light of the day.
Unfortunately, the past track record of the Government, even
on non-controversial reforms, does not provide much encouragement. Take the case
of the Companies Bill. When the UPA Government came to power four years ago, a
White Paper for Company Law reforms along with a draft Companies Bill was
circulated. We were told that the Government was determined to ensure that the
Companies Act was replaced by a new Companies Act, which would be more
company-friendly and suited to the present business environment, within its
term. The Minister concerned had gone so far as to point out that his
predecessors had not succeeded in doing so, as their Governments fell before the
law could be passed, but that he was determined to ensure that the new Companies
Act was in place during his tenure. What is the position today ? Till today, the
new Companies Bill has not even been introduced in the Parliament.
We have had umpteen number of committees recommending a
complete overhaul of direct tax laws. For each of the last three years, we have
heard promises that the new direct taxes code would soon be in place within the
next year or so. At least, there has been some consistency in this. Whenever
this has been mentioned over the years, the time frame has been consistent —
within the next one year ! Till now, the new direct taxes code has not even been
placed before the Cabinet, nor any draft circulated for public comments.
Perhaps, this is fortunate. From what feedback one has received from the people
involved in reviewing this draft legislation, the harshness and complications of
the provisions have only been enhanced in the draft code, rather than being
simplified and reduced.
The Limited Liability Partnership Bill, which would allow
professionals to compete with their global counterparts by having larger
partnership firms, was introduced in the Parliament with much fanfare in
December 2006. It was then referred to a standing committee, which has given its
suggestions in November 2007. On 1st May 2008, the Cabinet approved a new draft
of the Limited Liability Partnership Bill, which was to be introduced in the
Parliament. This Bill is yet to be enacted by the Parliament.
While one does not doubt the importance of the reforms
relating to banking, insurance and pensions, the smaller and easier reforms can
definitely be pushed through with much lesser effort on the part of the
Government. One understands that the Government has different priorities, but
surely a part of its efforts can be directed towards such necessary but smaller
reforms.
While enacting these laws, it is essential for the Government
to ensure that these laws are fair, clear and do not leave much scope for
harassment. What businessmen are looking forward to is clarity and fairness of
various legal provisions, so that they can focus on carrying on their business
more efficiently and on expansion of their businesses, rather than wasting their
time in unwanted litigation, cumbersome compliance procedures and warding off
undue harassment by Government officials. It is only then that businesses and
the economy as a whole can continue to grow rapidly, so that India’s economic
potential is truly unleashed.
It is now accepted worldwide that the international clout of
a country depends upon its economic strengths. Other countries are willing to
bend backwards to accommodate the views and expectations of economically strong
countries, to secure economic benefits for themselves. One hopes that the
Government creates an environment in which businessmen can thrive, so that the
country as a whole improves its bargaining power.
In the whole debate on the nuclear deal, the merits and
demerits of the deal to the country were not even considered. One wishes that a
day will come when all political parties keep the long-term benefits to the
country as their paramount touchstone for deciding on whether to support the
Government or not, rather than let individual politicians’ personal agenda or
their party’s agenda or ideology come in the way of what most Indians believe is
in the interest of the country. Only then can we be said to have matured as a
real democracy !
Only time will tell whether these expectations of ours from the Government
and politicians are too high !
Gautam Nayak
