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The Union Budget 2015-16 was also marked by announcements of a number of legislative changes, totalling almost 10 Bills. With the budget session ending in the Lok Sabha this week, the government has taken concrete steps in two of the proposed legislations — the rest are yet to be finalised.
In the Budget speech, Finance Minister Arun Jaitley announced an Undisclosed Foreign Income and Assets Bill, popularly termed the black money Bill), one on a bankruptcy code to tackle issues of insolvency in distressed companies and a Bill on benami transactions, to tackle unaccounted money at home. Also, a public contracts Bill for resolution of disputes in contracts, a Bill on commercial disputes, a constitutional amendment on the proposed national goods and services tax (GST), one on an Indian financial code to revamp the regulation of financial markets, and a regulatory reform law for the infrastructure sector.
Subsequently, it was proposed that a Bill to set up a bank for micro financial institutions was also to be prepared. Another to create an agency to look after government bonds was also announced.
So far, the government has introduced the Black Money Bill, introduced in the first half of the budget session, and the GST constitutional amendment, being debated in Parliament.
The former, introduced in the Lok Sabha in March, has proposed a jail term up to 10 years for offenders. The GST constitutional amendment will face a challenge in the Rajya Sabha, as it has to be passed with a two-third majority and the government is in a minority in that chamber.
The black money bill is a money bill, so it does not face much problem in the Rajya Sabha as the upper house does not have power to reject it. The budget session in the Lok Sabha is scheduled to conclude on Friday and in the Rajya Sabha on May 13. Not much has been achieved on the other legislative measures. Two provisions in the Finance (Budget) Bill are now being proposed to be enacted separately – on a Public Debt Management Agency (PDMA) and a financing agency for micro units.
The proposed PDMA is to oversee government debt. It was introduced in the Finance Bill by way of amendments to the Reserve Bank of India (RBI) Act and Government Securities Act. These were withdrawn when the Finance Bill was introduced in the Lok Sabha, with the government deciding to to force the changes in a hurry, over a reluctant RBI.
“Since RBI has been handling public debt management, the government, in consultation with RBI, will prepare a detailed road map separating the debt management function and the market infrastructure from RBI and having a unified financial market,” Jaitley said.
To facilitate the funding of 'bottom of the pyramid' entrepreneurs, the budget had proposed a Micro Units Development Refinance Agency (Mudra) Bank, with a corpus of Rs 20,000 crore. The ministry is setting this up as a non-banking finance company, a subsidiary of Small Industries Development Bank of India; it is to be made a bank by way of a Bill. To also overlook micro finance institutes, it could be introduced in Parliament's winter session.
The government had announced a new and more comprehensive Benami Transactions (Prohibition) Bill would be introduced in the current session to tackle unaccounted money in the country. This would enable confiscation of benami property and provide for prosecution. So far, the Bill has not been introduced.
To revamp the regulations on and functions of the financial markets, the government stated its intention of implementing an Indian Financial Code (IFC), based on recommendations of the Financial Sector Legislative Reforms Commission, headed by ex-judge B S Srikrishna.
It has formed task forces for the four bodies proposed in the IFC -- a Financial Data Management Centre, Financial Sector Appellate Tribunal, a Resolution Corporation and a PDMA. According to the government, work by the task forces is progressing satisfactorily.
The government has also proposed to set up a task force to establish a sector-neutral Financial Redressal Agency, to address grievances against all financial service providers. This is yet to be formed.
For resolving issues of insolvency in distressed companies, the Budget had proposed to introduce a comprehensive Bankruptcy Code. A committee on the subject, headed by T K Vishwanathan, has given one report and comments from the public have been received. These are being examined for possible incorporation in the final law, to replace the Sick Industrial Companies Act.
It has also proposed to introduce a Public Contracts (Resolution of Disputes) Bill to streamline the institutional arrangements in this regard. Not much is known about it. A Bill of a similar nature to help resolve commercial disputes, based on a report of the Law Commission, awaits consultation with stakeholders.
And, the intent of a regulatory reform law for the infrastructure sector has not seen much initiative.
