Budget 2023: Auguring a Business Enabling Environment

In 2002, the ambitious “doing business project”¹ was launched by the World Bank to assess the impact of regulations and their enforcement mechanisms on businesses. The project soon became an elite rank, with about 190 economies vying for top spot in rankings. In 2014, the Department for Promotion of Industry and Internal Trade² (DPIIT) was anointed as the nodal agency to steer the ease of doing business program in India. The DPIIT carried out strategic reforms required to rationalise the regulatory processes by identifying 10 parameters throughout the lifecycle of a business³ viz. starting a business, registering property, dealing with construction permits, getting electricity, getting credit, paying taxes, trading across borders, protecting minority investors, enforcing contracts and resolving insolvency. India’s rankings surged⁴ from 142 (in 2014) to 63 (in 2020), thanks to monumental reforms undertaken to nurture the business climate in the subcontinent. Today, though the “doing business project” stands discontinued⁵ in favour of business enabling environment⁶, India’s thrust on becoming a preferred investment destination⁷ remains unwavering.

The budget for 2023-2024 (budget) stands testament to this focus. In this article, the authors explore how the budget positions India as an investment-favourite destination.

The budget as a blueprint

The budget presents an impressive blueprint for the future of Indian economy as it seeks to minimise bureaucracy and reduce regulatory supervision for a buoyant business environment. The Jan Vishwas (Amendment of Provisions) Bill, 2022⁸ (Bill) purported to enhance ease of living and doing business. The Bill proposed the amendment of 42 central laws⁹ to decriminalise about 3400 minor offences with a two-pronged view. For one, the decriminalisation of offences would boost investor confidence in backing calculated risks and would relieve businesses from the apprehension of imprisonment for minor offences. For another, it would prevent additional stress on the already burgeoning caseload and would free up all resources for optimal allocation. Besides decriminalisation of minor offences, the Bill contemplates the rationalisation of monetary penalties based on the severity of the offence while also providing for an inflation of 10% in minimum fine and penalty for every three years.

The budget ushers in an era of trust-based governance, which in turn engenders compliance. Aside from unburdening India of antiquated litigation¹⁰, the budget underscores the thrust on perfecting all-round digital public infrastructure. For instance, the budget extends Digi Locker services at the entity level, announces the launch of Phase III of the e-courts mission and sets up the National Financial Information Registry¹¹. These measures will necessarily leverage technological advancements such as cloud-based storage, big data mining, processing through blockchain technology and artificial intelligence¹² (AI). The budget also declares the setting up of centres for excellence in AI, which will inspire interdisciplinary research and invite industry to evolve scalable problem solutions¹³.

Transparency and accountability are yet another mainstay of the budget. For instance, the permanent account number (PAN) will become more ubiquitous, as it is poised for use as a common business identifier¹⁴ across all digital systems in specified departments of government agencies. This not only ensures data integration for unified filing processes but also obviates repeated submission of documents. The budget also offers a graded scheme¹⁵ for settlement of contractual disputes with Government and Government undertakings¹⁶, highlighting the commitment to speedy resolution of governmental disputes.

In an encouragement of entrepreneurial effort, the budget extends the cut-off date for incorporation of startups and extends to them benefits under the Income Tax Act, 1961¹⁷. Once again describing micro, small and medium enterprises (MSMEs) as the growth engines of the nation, the budget revamps the credit guarantee scheme to MSMEs¹⁸.

Conclusion: Turning obstacles into opportunities

The budget 2023 echoes the popular sentiment that the most valuable business commodity is trust. Understandably, the labour law reforms in the offing will emerge as the key determinant to how the policies in the budget will play out.

It is worth bearing in mind that “ease” of doing business must not be misconstrued as an “absence of challenge”. Instead, ease of doing business is a system of futuristic, long-term values that empower entrepreneurship and instill industry with robust business ethics. These values are expected to inform the future of business environment in India. True to its promise of a sparkling future for India, the budget has accounted for balanced regional development and optimal allocation of resources to segue from the old to the new.

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