Economic Survey 2023 highlights Trust Based Governance: Points at decriminalisation of Financial Offences [Read Report]

The Economic Survey 2023, tabled before the parliament by the Financial Minister Nirmala Sitharaman reviews the performance of the Indian economy to date and lays the road ahead for the next fiscal year.

Among other important tax, revenue and economy related matters, the survey points at the trust based governance of the country in the previous fiscal years. The decriminalisation of offences were highlighted as one of the major steps in this direction.

Building trust between the government and the citizens/businesses unleashes efficiency gains through improved investor sentiment, better ease of doing business, and more effective governance. Consistent reforms have been made in this direction during the last eight years, as per the economic survey.

“Simplification of regulatory frameworks through reforms such as the Insolvency and Bankruptcy

Code (IBC) and the Real Estate(Regulation and Development) Act (RERA) have enhanced the

ease of doing business. The IBC has imbibed some of the best international practices of a liability resolution mechanism. It provides an honourable exit mechanism for honest business failures and enables the release of credit locked into the stressed assets for better resource allocation”, the survey highlighted.

Elaborating further on the significant reform to enhance doing business has been the decriminalisation of minor economic offences under the Companies Act of 2013, the reports stated that, “After the reform, more than 1400 default cases have been decided without resorting to the court. Also, more than 4,00,000 companies have willingly rectified past defaults to avoid penalties under the Companies Act.”

The total penal provisions were reduced from 134 to 124 post decriminalisation and compoundable offences from 81 to 31.

However, the defaults that were subject to civil liability increased from 18 to 58. However, most of this has to be contributed to by the reduced penalties of the penal and compoundable offences.

Removing almost 25000 unnecessary compliances, repealing more than 1400 archaic laws, abolishing the Angel tax and removing retrospective taxation on offshore indirect transfer of assets located in India were also highlighted as parts of the government’s resolve to ensure a non-adversarial policy environment.

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