Apart from starting to implement labour reforms, the Centre is also working to introduce land and direct tax reforms (legal reforms). These reforms are required to make India a hot spot for manufacturing and investments. Much of the deliberation on these reforms has been done. However, land reforms are proving to be a difficult task for the Central government as land is a state subject and much of the opposition the government is facing comes from the states. The Centre has already initiated labour and direct tax reforms. According to economic experts, the existing complex labour laws and rules are proving to be a hurdle to economic growth and if the Narendra Modi 2.0 government wants to make the country a $5 trillion economy, it needs to focus on labour reforms. Ironically, currently, the country has 37 Central laws and six amendments. Moreover, there are around 10 laws that deal with wages alone, separate laws for separate entities such as factory workers, beedi and cigarette workers, newspaper employees, cine workers, farm workers, mine and mineral workers etc. There are more than 1,000 minimum wages provisions in the law. Given the complexities of multiple laws and regulations, the environment for economic activities has been damaged. Land is basically a state subject as far as the Central government is concerned; the Centre had tried to amend the land laws, but there was strong opposition from certain quarters. The government then decided that since land is a state subject, so the states should take the initiative. As far as the Centre is concerned, we are moving ahead and working on the digitization of land records and model land lease agreements.
Land reforms need to deal with a definition such as “public propose” for which the land is being acquired by the government; then proper provisions of resettlement and rehabilitation are needed as lakhs of people get displaced after the government acquires their land without rehabilitating them. The incumbent BJP-led Central government has realised the need for bringing changes in the existing form of direct taxes and it has constituted a committee that is working to draft the direct tax code bill. The Centre had appointed a committee to look into the mater. The committee is tasked to draft a new direct tax code bill which can make taxation more predictable, cost compliant, easy to administer, minimises exemptions that serve a particular constituency, reduce the ambiguity and finally checks tax evasion. This committee is likely to submit its draft by early next year.
The Centre is also working to speed up the arbitration process and reduction of litigation that is causing stress on the business community. The district commercial courts are being set up for ensuring better implementation. As many as 750 posts have been filled in courts, infrastructure is being provided and many arbitration courts are being opened for speedy resolution of litigations. The first stint of the Modi government saw some radical steps, including the introduction of a new tax regime called the Goods and Services Tax (GST); it is being said that Modi 2.0 is going to introduce impactful reforms which are going to take the Indian economy to new height.