Indian Government Budget 2025-26 Part 5

 

Reforms as the fuel

• Reaffirmed the commitment of the tax department to “trust first, scrutinize later”. 
• A new income-tax bill will be introduced next week. 
• The FDI limit for the insurance sector will be raised from 74 to 100%. This enhanced limit will be available for those companies which invest the entire premium in India. The current guardrails and conditionalities associated with foreign investment will be reviewed and simplified. 
• The services of India Post Payment Bank will be deepened and expanded in rural areas.
• NaBFID will set up a ‘Partial Credit Enhancement Facility’ for corporate bonds for infrastructure.
• Public Sector Banks will develop ‘Grameen Credit Score’ framework to serve the credit needs of SHG members and people in rural areas. 
• A forum for regulatory coordination and development of pension products will be set up. 
• To implement the earlier announcement on simplifying the KYC process, the revamped Central KYC Registry will be rolled out in 2025. A streamlined system for periodic updating will be implemented. 
• Requirements and procedures for speedy approval of company mergers will be rationalised. The scope for fast-track mergers will also be widened and the process made simpler.
• To encourage sustained foreign investment and in the spirit of ‘first develop India’, the current model Bilateral Investment Treaties will be revamped and made more investor-friendly.
• The government is determined to ensure that India’s regulations must keep up with technological innovations and global policy developments. A light-touch regulatory framework based on principles and trust will unleash productivity and employment. Through this framework, regulations that were made under old laws will be updated. To develop this modern, flexible, people-friendly, and trust-based regulatory framework appropriate for the twenty-first century, four specific measures will be undertaken:
  • A High-Level Committee for Regulatory Reforms will be set up for a review of all non-financial sector regulations, certifications, licenses, and permissions. The committee will be expected make recommendations within a year. The objective is to strengthen trust-based economic governance and take transformational measures to enhance ‘ease of doing business’, especially in matters of inspections and compliances.  States will be encouraged to join in this endeavour. 
  • An Investment Friendliness Index of States will be launched in 2025 to further the spirit of competitive cooperative federalism. 
  • Under the Financial Stability and Development Council, a mechanism will be set up to evaluate impact of the current financial regulations and subsidiary instructions. It will also formulate a framework to enhance their responsiveness and development of the financial sector. 
  • In the Jan Vishwas Act 2023, more than 180 legal provisions were decriminalized. The government will now bring up the Jan Vishwas Bill 2.0 to decriminalize more than 100 provisions in various laws.