Day after poll results, govt pushes reforms
A day after the ruling Bharatiya Janata Party (BJP) secured an electoral victory in two more states, the National Democratic Alliance (NDA) government received Parliament’s backing on Tuesday for two key reform bills.
The Companies (Amendment) bill, 2017, is aimed at improving corporate governance and the Indian Institute of Management (IIM) bill at granting autonomy to the elite B-schools, ridding them of government interference.
Both received the Rajya Sabha’s approval, having been passed earlier by the Lok Sabha, and now need the President’s signature to become law.
After cracking down on unaccounted wealth through demonetisation in November last year and rolling out the goods and services tax (GST) from July 1 to unify India into a common market, the government has other pending reform measures on its agenda. They include a possible merger of some state-run banks to improve efficiency, a new direct tax code and divestment of government stakes in some stateowned enterprises.
Analysts said the government is likely to continue to demonstrate its resolve to implement reforms where needed, although most of its time and resources would go into seeing through to completion the measures already announced.
The move towards integrating the informal part of the economy into the formal one through GST was a sequel to demonetisation, said A K Verma, a Kanpur-based political analyst and political science professor at Christ Church College.
“In the same way, what follows logically to the reforms already taken are the ones likely to follow, although new reforms having the potential for major disruption in the economy are unlikely till the 2019 national polls,” said Verma.
Prime Minister Narendra Modi, in his address at the Hindustan Times Leadership Summit
on November 30, said that he was prepared to pay a political price for fighting corruption as part of his government’s wider efforts to change the “broken system” of the past 70 years and improve the lot of the country’s poor.
The IIM bill grants administrative, academic and financial autonomy to the elite B-schools and allows them to award fullfledged degrees to their students.
The Companies (Amendment) bill, 2017 has restored the original provisions in the Companies Act 2013 that empowered the government to limit number of layers of subsidiaries a firm can have.
This provision was to be liberalised as per an earlier form of the bill, but the government chose to implement the original provision through a notification in September, limiting the layers of subsidiaries that companies can have to two, which will apply prospectively.
Existing companies have to disclose all details of their subsidiaries to the Registrar of Companies.
The bill passed by the Rajya Sabha on Tuesday simplifies many procedures and proposes stringent penalties in case of nonfiling of balance sheets and annual returns.