Ease of doing business initiatives in the State of Kerala

?Ease of doing business initiatives in the State of Kerala

# Business???# Initiative # State??????

??????There have been persistent demands from industry Associations from the State of Kerala and establishments for the simplification and reduction in the number of forms and registers required to be maintained or submitted by MSMEs.

?????The Committee constituted vide G.O (Rt.) No: 770/2021/ID dated 26.07.2021 for scrutinizing all Acts and Rules relevant to business community and citizens as part of the initiative of ease of doing business in the state of Kerala found that the maintenance of multiple registers and furnishing of a large number of returns mostly with similar data under various State legislations is causing a heavy and avoidable burden on enterprises. This has also increased the paperwork in offices without any corresponding benefits. Laws also mandate that many of these records have to be kept for a long period by such enterprises. Most of these registers and returns contain common particulars to be submitted separately and repeatedly. By unifying many of these registers and returns, the administrative difficulties faced by the enterprises can be reduced.

????On the basis of the suggestions received from the Industry Associations and stakeholders, a new legislation, namely, the Kerala Laws (Simplification of Returns and Registers for Specified Enterprises) Bill, 2022 is recommended by this Committee in order to facilitate the growth of small industries and business in our State and to de-duplicate and reduce the numbers of returns to be furnished and registers to be maintained, thereby reducing their administrative work.

????Committee also considered the implementation of Self- Certification Regime in the MSME Sector. In G.O. (MS) No. 55/02/LBR dated 27.07.2002 Government of Kerala have introduced Self-Certification regime in respect of eight Labor Laws in the Information Technology and Information Technology Enabled Services (I.T.E.S) industries. In G.O.(MS) No.18/04/LBR dated 24.03.2004, the Self- Certification Regime introduced in I.T & I.T.E.S industries has been extended to the units in the Special Economic Zones as well.

??Under the Self- Certification Regime, the certificates to be furnished to the respective authorities under the above listed Acts and Rules in the form viii have been prescribed. Once the Self- Certificates are furnished, the routine inspections are discontinued. It is noted that Self-Certification does not take away the powers of Government and any of its authorized officers to inspect establishments relating to these industries and establishments about which substantive complaints are received. The objective is to avoid routine inspections by various departments as mandatory requirements before issue or renewal of various licenses. Self-certification casts the primary responsibility on the management to comply with the law voluntarily.

????Committee has recommended the adoption of Self- Certification procedure under the above labor laws over and above the IT and I.T.E.S and those under Special Economic Zones to MSMEs in industrial areas, industrial parks, export units, Research and Development units, specified knowledge and skill-based sectors throughout the State.

???Decriminalization of the penal provision in the State laws to enable the effective implementation of Ease of Doing Business is one of the most important areas under the terms of reference for this Committee. The Committee identified 38 legislations relevant to business and citizens containing penal provisions.

??????I.?????????Welfare Fund legislations are primarily intended for the welfare of the workers or employees of the respective sectors. The fund or scheme constituted under such Acts is dependent on the contributions made by the workers and employers, supplemented in some cases with Government grants.

????II.??????????The offences relate mainly to non- payment or delay in payment of contribution, non- maintenance of records or furnishing incomplete or wrong statements or returns with a view to avoid payment etc.

???III.?????????In all these enactments, the punishment provided for the first offence appears to be fine of about 1000 rupees or imprisonment for a term up to 3 or 6 months or both.

??IV.??????????It is a settled practice for courts to award only fine, mostly on pleading guilty, when the punishment provided is either imprisonment or fine or both.

????V.??????????Since most of these legislations were passed long ago, the fine is mostly of meagre amounts.

??VI.??????????The punishment provided, as it now stands, is not deterrent enough to ensure payment to the fund. ?The fine amount is also not in proportion to the defaulted amounts.

?VII.??????????For each offence, prosecution has to be launched before courts causing considerable burden to the business as well as the officers of the department in addition to making the courts overburdened without desired results.

(1)??The punishment of ‘fine only’ can be replaced with penalty of an amount not less than the defaulted amount.

(2)??The punishment of imprisonment ‘up to 6 months or fine or both’ can be replaced with penalty of a higher amount.

(3)??For second or repeated offence, the punishment of imprisonment has been retained, and the fine may be enhanced significantly.

(4)??The non-payment of penalty has to be treated as an offence in welfare fund legislations for ensuring payment and a provision for composition of such offence can be provided for avoiding imprisonment.

(5)???Prior opportunity before prosecution for certain offences can be given for complying with the relevant provisions.

(6)???Composition of the offences punishable with imprisonment and fine by an officer authorized by the Government can be provided.

????????Recommendations on Administrative matters are related to 9 Departments, namely, Department of Electrical Inspectorate, Pollution Control Board, LSGD, Land & Revenue, Legal Metrology Department, Department of Industry, Mining & Geology, Fire & Rescue Department and Excise Department.

???????The Committee is of the view that a comprehensive unified legislation by the name “the Kerala Facilitation and Development of Enterprises Act, 2022” need to be put in place and the said legislation need to take care of the matters.

???????The Kerala State Right to Service Act, 2012 (Act 18 of 2012) was passed by the 13th Kerala Legislative Assembly. This is a good time to reassess the Kerala State Right to Service Act 2012 (Act 18 of 2012) and make it more effective to meet the challenging demands of the present day. For the effective implementation of right to service, a new legislation is recommended by this Committee guaranteeing timely delivery of public services to eligible persons in the State and ensuring accountability of public servants in case of default.

???????The Committee has also made administrative suggestions to make the delivery of right to services effective and transparent. This Committee has proposed amendments to certain labor laws in the State of Kerala such as Amendment to Kerala Industrial Establishments (National and ??Festival Holidays) Act, 1958, Amendment to Kerala Shops and Commercial Establishments Act, 1960 (Act 34 of 1960), Amendment to the Kerala Casual, Temporary and Badli Workers (Wages) Act, 1989 (Act 1 of 1990).

????????Investment promotion and industrial development is often perceived as the exclusive responsibility of the Industries Department. Such an exercise should cover the regulatory framework, processes and service delivery. It is time that this is declared as a priority of the whole of government from an economic, employment, finance and welfare point of view. This message needs to go across all departments and their offices.

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Note: - Johnbrittokurusumuthu worked as Consultant to the Committee