Five laws that the FM proposes to change

Experts suggest ways in which the government can make the laws more effective

Consolidating the labour laws

Issues & challenges

The Budget promises to come up with a plan to consolidate labour laws under four subjects: Wages, industrial relations, social security and working conditions. “Fragmentation is a big issue as there are more than 100 statutes and many of them overlap,” says Avik Biswas, partner, IndusLaw. There are cumbersome procedural requirements with multiple licences and registrations. “Most of our labour statutes are in the context of manufacturing-based, traditional employer-employee relations,” says Biswas. The biggest challenge to labour law reforms has been the political backlash — be it from the unions, trade bodies, businesses or generally the electorate.

What the government needs to do

• Two draft labour codes (wages and industrial relations) have been pending before the Cabinet since 2015. “This needs to be acted upon soon, while work on the other two areas must be hastened,” says Biswas
• Discussions need to be expanded to include employer groups, associations and the public at large
• “The primary philosophy of reform must be much beyond just ‘consolidation’ of all existing laws in a few Codes,” says Biswas. Procedural requirements must be far more simplified and electronically enabled, he adds 

Amendment in laws to address the black money menace

Issues & challenges

The legal machinery for tackling black money is complex and scattered across varied pieces of legislation and institutions. The government could release an annual guide, which consolidates the legal provisions and the ramifications thereunder that tackle black money. “This will also facilitate inter-agency coordination,” says Amit Singhania, partner, Shardul Amarchand Mangaldas & Co.

What the government needs to do

• An annual report will boost the morale of the honest taxpayer and also have a deterring impact on offenders, says Singhania
• The income tax returns were revised in 2012, requiring all Indian residents to disclose their foreign assets and foreign bank accounts. At present the law does not provide any specific penalty for failure to make such disclosure, noted Singhania
• The government could consider legislation on the lines of the United States’ Foreign Account Tax Compliance Act (FATCA) to capture information on foreign accounted wealth

 

Speedy enactment of the Model Shop and Establishment Bill

Issues & Challenges
 
The Model Shops and Establishments (Regulation of Employment and Conditions of Service) Bill, 2016 (“Bill”) was introduced on June 29, 2016, and is a suggestive piece of legislation for the states and union territories (UTs). The Bill aims to bring in uniformity of laws across states and UTs, apart from facilitating the ease of doing business and providing conducive employment conditions.
 
The advisory nature of the Bill poses a challenge with regard to its timely adoption by the state governments. Each state has its legislation on shops and establishments. “Without any firm directive or timeline on adoption, a speedy enactment of the Bill may not be easily achievable,” says Pooja Ramchandani, Partner, Shardul Amarchand Mangaldas. 

 
What the government needs to do

“The Centre and the state governments should jointly work on the effective implementation and adoption of the Bill,” said Ramchandani. The Centre may explore the option of giving incentives to the state governments to encourage a speedy adoption of the Bill, she added.
 
Laws to confiscate properties of individuals who have fled the country

Issues & Challenges
 
Given the size of bad debts in India, the proposal to enact a law to confiscate the assets of defaulters who have fled the country is a well-intended move. “What the Sahara and Mallya cases have unfortunately proved is that physical confinement is the only effective weapon that can help extract monies out of defaulting promoters,” says Ramesh Vaidyanathan, managing partner, Advaya Legal.

 
The key challenge will be the constitutional validity of such a law if it entitles the creditor to summarily attach the property of the debtor, noted Vaidyanathan. “The other aspect to tackle will be the attachment of assets outside India in the absence of appropriate treaty with the concerned foreign country.”

What the government needs to do 

• The law must also formulate guidelines on lifting the corporate veil and attaching the personal property of the promoters without the intervention of court
• Simplify the process of auctioning the attached property, making it a time- bound exercise

 
Framing a model law for contract farming

Issues & Challenges
 
The government has been looking at adopting an integrated approach to re-energise farming activity in rural areas and also double farmers’ income. The challenge has been that land and agriculture is a state subject, with the Centre having very little role to play. Currently, the model APMC Act has a provision to allow contract farming

What the government needs to do 

• Set up a high-powered committee to frame the model law on contract farming, in consultation with the states
• The present contract farming framework only covers marketing of produce. The new legislation should be comprehensive in nature, covering the entire value chain, including all the commodities