The Companies (Amendment) Bill introduced in the monsoon session amends the Companies Act, 2013.
The primary objective of this Bill is to decriminalise certain offences to omit imprisonment and fine. It also reduces the quantum of fine payable as penalty for certain offences. For instance, penalty under Section 92 of the Act has been reduced by more than half. This Amendment adds to an existing pattern of this Government’s legislations. It comes in succession to the Land Acquisition Bill 2014, Labour Code reforms, reduction of Corporate Tax, privatisation of utilities like the airports, and the latest provision of contract farming under the Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Bill, 2020. There is a glaring pattern of benefitting the corporates in these legislations- offences under the Companies Acts are decriminalised, tax rate has been reduced, labour codes have been reformed to suit the Corporate needs, contract farming has given the Corporates an inlet into the farming sector, land acquisition has further allowed the acquisition of farmer’s land.
In this barter of benefits, the Government has benefitted Corporate India unevenly. As highlighted in the speech on September 19, 2020, it is important to evaluate what Corporate India has paid in return. On the subject of decriminalising offences, let’s remember the case of ICICI and the example of YES Bank. Corporate giants like Mehul Choksi and Nirav Modi are still not residing in the country. Additionally, the striking reduction in corporate tax from 30% to 22% by the amendments in 2019 to the Income Tax Act, 1961 (IT Act), and the Finance (No. 2) Act, 2019 has not yielded results either. It has caused a gaping dent in the Government’s revenue estimated at 1.45 lakh crore, increasing the fiscal deficit from 3.3% to 4% (2019-20), without boosting private investment or jobs. Moreover, the labour laws are being reformed in the wake of increasing unemployment, which is aggravated by the Corporates firing employees garbed in the excuse of the pandemic.
For all these reasons, the Government is urged to exercise prudence while bringing this Amendment and ensure that Corporate India creates jobs, investment and practices clean business.