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Cyber Security – An Insurance From Cyberattacks or Crimes

by Sunil Kumar Gupta | Mar 21, 2023 | blog

Introduction of Cyber Security

On the internet, data or information is widely spread and with each year, technology is becoming more comprehensive and complicated, and so do cyberattacks. Digital crime is also enhancing with great intensity and certainly, it is not restricted to any specific Internet-accessible platforms. Different devices such as desktops, smartphones, and tablets each might carry a particular level of digital defense, yet each device contains certain vulnerabilities which provide a pathway for hackers to attune to the devices.

On the positive side, particular digital security tools and services operate parallel to these negative tech counterparts.

In this section, we will emphasize on the introduction of cyber security and other associated concepts of the same. Cyber security refers to the set of techniques that are used to conserve the integrity of networks, programs, and data from attack, damage, or unauthorized access. Information technology includes a broader category that preserves all information assets, be it in hard copy or digital form. The term cyber security is not restricted to computers, but it is also implemented to the varied inter-connected systems such as computers, servers, mobile devices, electronic systems, networks, or data.

The digital safety tool is tremendously flexible and possessed by distinct industries and of various designs or types. Various devices such as navigation apps, game apps, and social apps always have access to the internet, like our desktops, mobile phones, tablets, laptops, and others. Similar to that, even if you are pursuing a store or listening to music, there is a probability that you are engaging in the environment utilizing the necessities of cybersecurity’s modern definitions.

Contemporary, cyber security jobs contain the digital defense of information or data. Typically, it includes information storage protection, identification of intrusion, and response to cyber-attacks that seek to steal personal information. The scope of cyber security is huge and the niche of cyber security to digitally instantly raises concern. In India, cyber crimes are covered by the Information Technology Act, 2000, and Indian Penal Code, 1860 to prevent cyber crimes. The primary one takes care of issues associated with cyber crimes and electronic commerce, while the latter one, provides an outline and definition, including punishments, which we will discuss later in the blog.

It is to be noted that, cybersecurity encompasses –

1. Network Security

Primarily, cyber security emphasizes on data storage and transfer, while the network is much broader. As its name defines it, in general, network security includes the defense, maintenance, and recovery of networks. It contains cyber security as a defensive way to protect all network users from digital threats, even if a provided cyber attacker pertains more purposes than mere conservation of data exploitation.

With the objective to conserve the integrity, safety, and sustainability of network users, the professionals operating the same must emphasize on securing connection privacy to prevent cyber security.

The network security services also include anti-virus software, malware detection tools, firewall upgrades, virtual private networks (VPNs), and other security programs. As mentioned, the terms cyber security and network security are often used interchangeably, which often cover similar bases and deviate at intersections where data storage and data tracking need to overlap.

2. Information Security

Several commercial workplaces use synchronized facets of day-by-day operations. It handles user login, schedule management tools, project software, and telecommunication, among others.

It conserves sensitive information from unpermitted activities containing inspection, modification, recording, and other disruption or destruction. The objective of information technology is to ensure the safety and privacy of significant data such as details of a customer account, financial data, or intellectual property.

3. Operational Security

Operational security is also known as procedural security, which is referred to as a risk of managing processes to view the activity from the perspective of an adversary with the objective to conserve sensitive information from attackers. It includes the below-mentioned steps, as follows –

Identification of sensitive data: Identify the sensitive data containing product research, intellectual property, financial statements, customer information, and employee information; this will be the data one will require to protect resources.
Identification of potential threats: For every category of sensitive information, one must identify the potential threats. It is to be noted that, while you look for potential third-party risks, also watch out for internal threats.
Analyzation of security holes and other vulnerabilities: One must access their information and means of safeguarding and determine the loopholes or other weaknesses associated with security.
Enhance the level of security with respect to each vulnerability: Rank the distinct vulnerabilities based on the likelihood of attacks, the extent of damage, and the duration of recovery from the same.

What Are the Different Types of Cybersecurity?

In this section, we will highlight the different types of cyber security. Cyber security pertains to a wide field possessing distinct disciplines, which mainly can be characterized as follows –

a. Network Security

Major cyberattacks take place over a network and in order to ensure network security, network security solutions need to be utilized which are designed primarily to identify and block such attacks. Moreover, these solutions include data and access controls like Data Loss Prevention (DLP), IAM (Identity Access Management), NAC (Network Access Control), and NGFW (Next-Generation Firewall) application controls with the motto to enforce safe web use policies.

Besides this, in order to ensure multi-layered network protection, advanced technologies such as IPS (Intrusion Prevention System), NGAV (Next-Gen Antivirus), Sandboxing, and CDR (Content Disarm and Reconstruction) are utilized. However, this won’t be enough to prevent such attacks, therefore, network analytics, threat hunting, and automated Security Orchestration and Response (SOAR) must be used.

b. Cloud Security

Multi-National Companies (MNCs), large organizations, firms, and even startups are constantly adopting cloud computing, which makes cloud security a major priority considering that it engages in data storage, software information, networking, analytics, and intelligence over the internet with the sole objective to provide instant innovation, flexible resources and economies of scale.

Considering the threat to cloud security could result in a breach of security, therefore, it is significant to obtain a cloud security strategy containing cyber security solutions, controls, policies, and services that allow you to protect the entire cloud deployment against such attacks.

c. IoT Security

The full form of IoT is, the “Internet of Things”, which offers several productivity benefits to an organization, however, the same device tends to introduce the same organization to potential cyber security threats which result in breaches of vulnerable devices inadvertently connected to the internet. IoT security preserves devices from discovering and classification of connected devices, including automatic segmentation to administer network activities and utilizing IPS as a patch (virtual) in order to restrict the exploitation of vulnerable IoT devices.

a. Application Security

Like any other activities mentioned here, web applications are also connected to the internet which again impose threat due to flaws in application such as injection, broken authentication, misconfiguration, and cross-site scripting.

Application security is an appropriate way to prevent bot attacks and malicious interactions with APIs and web applications.

b. Mobile Security

Mobile security is often overlooked which allows access to corporate data, including exposing businesses to threats through malicious applications (apps), phishing, instant messaging attacks, and phone mirroring to name a few. Mobile security preserves such attacks and prevents operating systems and devices from such attacks.

c. Zero Trust

This traditional security model is a perimeter-emphasized model, which builds walls around the valuable assets of the organization. On the contrary, this imposes distinct issues like imposing possible inside threats and instant dissolution of the perimeter of the network. This security focuses on a granular approach in order to ensure security, including protecting individual resources by a combination of micro-segmentation, observing and enforcement of role-based access controls.

d. Endpoint Security

As mentioned earlier, the zero trust security model stipulates the creation of micro-segments around data segments wherever they might be. A way to prevent this is by using endpoint security. Endpoint security allows firms, organizations, and companies to preserve end users using devices like laptops, mobile phones, tablets, smartwatches, and desktops with data and network security controls, advanced threat prevention such as anti-phishing and anti-ransomware, and technologies.

In this section, we have understood the types of cyber security; now let’s move to the importance of cyber security to establish a better understanding of preventing cyberattacks since with the introduction of technologies, our vulnerability towards cyberattacks is constantly increasing.

The importance of cyber security differs based on the users or who is utilizing the technologies, it could be a student, business or organization, or banking sector, among others.

What Are the Distinct Importance of Cyber Security?

1. Importance For Digital World

Cybersecurity imposes significant threats to the digital world, especially, when the world is connected with each other digitally. For instance, in 2017 breach of Equifax exposed the data of over 145 million users, while in 2018 the breach of Marriot exposed the data (personal information) of 800 million individuals.

Such breaches of personal data or information had significantly affected the companies financially, most significantly resulting in losing customers. Hereto, cyber security is important to preserve businesses and persons from probable threatening consequences of data or security breaches.

2. Importance For Banking Sector

The banking sector is the backbone of any sector since a breach of the banking sector of an economy would result in a breach of names, emails, addresses, phone numbers, and other personal information, which further allows access to account information, containing account numbers and balances of customers.

Therefore, such breaches permit the hacker to access an abundance of sensitive data breaches, which could be the reason for fraud and malicious purposes.

3. Importance For Business or Organizations

The importance of cyber security for businesses or organizations allows hackers to access the data or personal information of customers or clients, which could also include information or details of credit or debit cards. This also results in businesses or organizations paying millions or billions to hackers.

4. Importance For Students

Cybersecurity is significant for students as well, which allows hackers to access their bank details and credit or debit card information, including access to their Social Security numbers.

With an understanding of the importance of cyber security, let head on to the features of cyber security in the next section.

What Are the Features of Cyber Security, One Should Know?

The entire world is interconnected with the internet, which has significantly enhanced during the pandemic through the usage of web applications or other websites. Despite bringing the entire world close, this has also presented an opportunity for cybercriminals to breach into our systems or mobiles. Considering the level of harm it can cause for an individual or organization or firm, everyone must immediately attain more knowledge with respect to the understanding of features of cyber security. An adequate understanding of the features of cyber security could be the primary step toward establishing a defense against such breaches and attacks.

1. Prevention from external threats

External sources are causes for cyberattacks or breaches through phishing, denial of services, endangered web applications, and hostile email attachments, among others. Hereto, such security applications attached to respective systems constantly monitor or prevent these external threats.

2. Regulatory compliance for security

Information security is significant for any organization or firm, be it the healthcare sector or banking sector, or finance sector. Considering that, all the organizations or firms pertain to an eccentric set of standards, practices, regulations, and compliance with respect to data or information collected by them.

Regulatory compliance is basically ensuring conformance with compliance requirements to laws, specifications, and guidelines processes associated with the business.

3. Fortification from internal threats

Prevention from internal threats is as much as essential as ensuring preservation from external threats since both inflict threats on the organization or firm. The primary reason for triggering internal threats is misconfiguration, employee mistakes, faulty choices of employees, or bad actors.

Although, a definitive security system and a cybersecurity team attenuate these threats or attacks from organizations or firms.

4. Cloud-based security services

The cloud-based security services refer to the backend brain security systems which utilize a wide range of tools with the objective to ensure proper analytics and intelligence threat. Such services pertain a monitoring security endpoints and pervade machine learning models with the objective to ameliorate the scanning for all-inclusive objectives.

5. Consolidated solutions

Cybersecurity solutions should provide an absolute panacea to preserve the system of organizations or firms from the wide range of threats. In order to do so, the concerned security experts must know when and how to ensure complete utilization of anti-spam, anti-virus, anti-malware, content filters, and wireless security, among others.

This comprehensive protection or solution tends to preserve the system from such threats or attacks without compromising the confidentiality and security of data and enterprises.

6. All-inclusive security system: detection, prevention, & response

A wide range of security threats or cyber-attacks can be prevented or blocked by ensuring timely detection or tracking of the same. In order to do so, appropriate platforms are used that tracks such attacks and spontaneously send alert and response to them. The tools such as hardware and software firewalls, network analyzers, SSL or TLS proxy servers, and other web applications or apps or platforms are used.

Cybersecurity Security Awareness & Indian Economy

The Internet had brought a wave of transformation in everyone’s life by altering the way of communicating, sharing updates, playing games, shopping, and even making friends. The internet is affecting every part of our daily life.

Considering its effect on our daily lives and every sector of the economy, it is significant to attain the proper education regarding the proclamation of information with the objective to prevent cyberattacks or crimes, including reenacting that students play a crucial role in creating an ecosystem of cyber security with the motto to restrict cyber-attacks or crimes.

Cyberspace interconnects us globally and keeping in the view that its usage is constantly expanding, the rate of cybercrimes, especially against children and women are rising such as cyberstalking, cyberbullying, cyber harassment, child pornography, and rape content, among others. With the objective to create a safe and sound cyber ecosystem, it is essential to follow cyber-safe practices.

With that, let’s move on to cyber crimes laws in India –

a. Information Technology Act, 2000 (IT Act)

The IT Act enacts cyber laws in order to regulate electronic means of communication, and trade, including commerce to prevent computer crimes. The overview of the act is defined as –

“An Act to provide legal recognition for transactions carried out by means of electronic data interchange and other means of electronic communication, commonly referred to as “electronic commerce”, which involve the use of alternatives to paper-based methods of communication and storage of information, to facilitate electronic filing of documents with the Government agencies and further to amend the Indian Penal Code, the Indian Evidence Act, 1872, the Bankers’ Books Evidence Act, 1891 and the Reserve Bank of India Act, 1934 and for matters connected therewith or incidental thereto.“

Penalty & Compensation

Section 43 of the IT Act

The provisions under section 43 of the Information Technology Act, 2000 defines as –

If any person without the permission of the owner or any other person who is in charge of a computer, computer system, or computer network-

“(i) accesses such computer, computer system or computer network or computer resource; (ii) downloads, copies or computer system or computer network or computer resource; (ii) downloads, copies or extracts any data, computer data-base or information; (iii) introduces or causes to be introduced any computer contaminant or computer virus; (iv) damages or causes to be damaged any computer, computer system or computer network data, computer database or any other programmes; (v) disrupts or causes disruption; (vi) denies or causes the denial of access to any person authorised to access; (vii) provides any assistance to any person to facilitate access in contravention of the provisions of this Act; (viii) charges the services availed of by a person to the account of another person by tampering with or manipulating any computer, computer system or computer network; destroys, deletes or alters any information residing in a computer resource or diminishes its value or utility or affects it injuriously by any means; (x) steal, conceals, destroys or alters or causes any person to steal, conceal, destroy or alter any computer source code with intention to cause damage; he shall be liable to pay damages by way of compensation to the person so affected.“

It simply signifies that if an individual commits cybercrimes like computer damage to a victim without the consent of the same. Then the owner of the computer is entitled to a refund of the entire damage. While section 66 is applicable to any conduct provided in Section 43 which is considered to be dishonest and fraudulent the cyber criminal is punishable with imprisonment of up to 3 years or with a fine which might extend up to rupees five lahks, or both.

While section 66 is applicable to any conduct provided in Section 43 which is considered to be dishonest and fraudulent the cyber criminal is punishable with imprisonment of up to 3 years or with a fine which might extend up to rupees five lahks, or both.

2. Further Extension of Section 66

Section 66B is defined punishment for deceitful stealing of computer resources or communication devices, it is defined as –

“Whoever dishonestly receive or retains any stolen computer resource or communication device knowing or having reason to believe the same to be stolen computer resource or communication device, shall be punished with imprisonment of either description for a term which may extend to three years or with fine which may extend to rupees one lakh or with both.“

Section 66C, includes information associated with punishment related to identity theft such as using an electronic signature, password, or any other unique identification feature fraudulently or dishonestly, which describes punishment as –

“Whoever, fraudulently or dishonestly make use of the electronic signature, password or any other unique identification feature of any other person, shall be punished with imprisonment of either description for a term which may extend to three years and shall also be liable to fine with may extend to rupees one lakh.“

Section 66D, this section involves information associated with punishment for cheating by personation by using computer resources, which is defined as –

“Whoever, by means for any communication device or computer resource cheats by personating, shall be punished with imprisonment of either description for a term which may extend to three years and shall also be liable to fine which may extend to one lakh rupees.”

Section 66E, this section of the information technology act includes information related to punishment associated with privacy violations such as taking pictures of private areas, and publishing/ transmitting these images without the consent of the concerned individual. If found guilty, the criminal would be punished with imprisonment of up to 3 years or a fine, which can extend up to rupees two lakh or both. Section 66F, the section 66F of the Information Technology Act defines punishment associated with cyber terrorism, be it to threaten the unity, integrity, security, or sovereignty of India or to strike terror in the people. In such cases, the cybercriminal would be punished with imprisonment, which could extend to life imprisonment

3. Section 67

Section 67 includes punishment associated with publishing or transmitting obscene material in electronic form, as –

“Whoever publishes or transmits or causes to be published or transmitted in the electronic form, any material which is lascivious or appeals to the prurient interest or if its effect is such as to tend to deprave and corrupt persons who are likely, having regard to all relevant circumstances, to read, see or hear the matter contained or embodied in it, shall be punished on first conviction with imprisonment of either description for a term which may extend to three years and with fine which may extend to five lakh rupees and in the event of second or subsequent conviction with imprisonment of either description for a term which may extend to five years and also with fine which may extend to ten lakh rupees.”

b. Information Technology Rules (IT Rules)

The different aspects of data collection, transmission, and processing are covered under this rule as –

The Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011

It includes details related to sensitive information personal details withheld by entities such as –

Password;
Financial information such as Bank account or credit card or debit card or other payment instrument details ;
Physical, physiological, and mental health conditions;
Sexual orientation;
Medical records and history;
Biometric information;
Any detail relating to the above clauses as provided to the body corporate for providing service;
Any of the information received under the above clauses by the body corporate for processing, stored, or processed under lawful contract or otherwise

This section defines a set of rules, procedures, practices, and sensitive personal data or information which needs to be complied with. Moreover, an audit will be duly conducted once a year or as required.

The Information Technology (Guidelines for Intermediaries and Digital Media Ethics Code) Rules, 2021

The Information Technology (Guidelines for Intermediaries and Digital Media Ethics Code) Rules, 2021 help in maintaining the safety related to the online safety of data of users, which administer the role of intermediaries or social media intermediaries with the objective to restrict the data transmission on the internet.

The Information Technology (Guidelines for Cyber Cafe) Rules, 2011

It includes guidelines for the cyber cafes to be complied with, and it includes registration of cyber café to generate unique identification numbers, identification of users, and management of physical layout and computer resources, among others.

The Information Technology (Electronic Service Delivery) Rules, 2011

This Act includes information related to the electronic service delivery of certain services like applications, certificates, and licenses, by electronic means. It specifically emphasizes on the services provided by the government signifying compliance requirements related to the Creation of a repository of electronically signed electronic records by Government Authorities, Procedures for making changes in a repository of electronically signed electronic records, among others.

Information Technology (The Indian Computer Emergency Response Team and Manner of Performing Functions and Duties) Rules, 2013 (the CERT-In Rules)

This Act includes rules related to distinct CERT-In Rules as per Rule 12 of the CERT-In Rules, providing a 24-hour response help desk. This help desk is operational 24 hours to report the cyber security incidents of persons, organizations, and companies, in case they experience cyber attacks.

c. Indian Penal Code, 1860 (IPC)

The Indian Penal Code, 1860 includes mentioned sections to prevent cyber crimes –

1. Section 292

This section excises control over punishment related to the publishing or transmission of obscene material or sexually explicit material digitally or electronically. In such case, a fine of 2000 or imprisonment of up to 2 years would be imposed.

2. Section 354C

It defines punishment related to taking or publishing images of the private parts of a woman, including actions. The section 354C is defined as –

“Any man who watches, or captures the image of a woman engaging in a private act in circumstances where she would usually have the expectation of not being observed either by the perpetrator or by any other person at the behest of the perpetrator or disseminates such image shall be punished on first conviction with imprisonment of either description for a term which shall not be less than one year, but which may extend to three years, and shall also be liable to fine, and be punished on a second or subsequent conviction, with imprisonment of either description for a term which shall not be less than three years, but which may extend to seven years, and shall also be liable to fine.“

3. Section 354D

It includes provisions associated with cyber stalking are included in this section, including tracking, emailing, including attempts to contact her through digital means or electronically. It is defined as –

“Whoever commits the offence of stalking shall be punished on first conviction with imprisonment of either description for a term which may extend to three years and shall also be liable to fine; and be punished on a second or subsequent conviction with imprisonment or either description for a term which shall not be less than three years but which may extend to seven years and with fine which shall not be less than one lakh rupees:

Provided that the count may, for adequate and special reasons to be mentioned in the judgement, impose a sentence of lesser period of imprisonment than specified minimum imprisonment.“

4. Section 420

This section includes punishments related to cheating and dishonesty associated with property delivery, which imposes imprisonment of up to 7 years along with fine for crimes such as fake websites or online or cyber frauds.

5. Section 463

Section 463 involves a punishment of 7 years or a fine, or both for the creation of false documents or false electronic records or part of a document or electronic record.

6. Section 465

This section is defined as –

“Whoever commits forgery shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.”

d. Companies Act, 2013

The Companies Act 2013 includes the daily obligations to be complied with by the corporate stakeholders. Each provision associated with the Information Technology Act, 2000 related to electronic records involving the manner and format of electronic recording, as far as it is in variance with the concerned Act would be applicable to records of the electronic form provided under Section 39

Considering that, the Indian government has taken certain initiatives to prevent cyber-attacks or crimes as follows –

Cyber Crime Awareness Booklet on Cyber Security Awareness

Under Cyber Security Awareness, the tips for preventing cybercrime are –

To keep your devices or mobile phones updated with advanced or updated safety patches.
Use the appropriate security software (latest version) to preserve your system or devices.
Always use or download the software or applications from trusted or known sources, and restrict from using pirated software on your system or devices.
Protect your devices or mobile phones with strong PIN codes or passwords and do not share the same with anyone.
Restrict sharing your net banking password, One Time Password (OTP), ATM/ mobile banking PIN, or CVV, among others with anyone, even if someone claims to be an employee of the bank.
Ensure to change the default admin password of the wifi router to a strong one and keep your wireless network encrypted.
Be cautious when using public wifi, including avoiding entering your personal and professional information or details while using these networks.
Use the virtual keyword to access net banking services on public computers and be sure to log out from the same after completion of the online transaction. Moreover, ensure to delete the browser history.
Be certain to scan all the email attachments from viruses prior to opening the emails, including ignoring downloading from untrusted emails.
Be cautious while sharing your identity proof, especially the one which identifies your personal or company identity.
Keep the IMEI code of your mobile in a safe place that can be the only access to you, an operator could blacklist or block or phone using your IMEI code, if your mobile phone is stolen.
Prior to entering your ATM PIN, observe your surrounding and the people around you.
Engaged in a detailed discussion of safe internet practices with your family and friends, including motivating them to follow the same in order to prevent cybercrimes or attacks.
Avoid sharing bank details or card details on e-wallets it enhances the possibility of theft or fraud due to a breach of security.
Contact the concerned authorities instantly if you think your safety is compromised.

Cyber Hygiene for cyberspace

Under the cyber hygiene initiative of the government, the Indian government has introduced some dos and don’ts to be followed in cyberspace emphasizing on different platforms.

Cyberspace is a complex and dynamic environment of interactions among people, software, and services supported by the worldwide distribution of Information and Communications Technology (ICT) devices and networks. The exponential increase in the number of internet users in India clubbed with rapidly evolving technologies has brought in its own unique challenges. Indian Cyber Crime Coordination Centre (I4C) under the Cyber & Information Security (CIS) Division of the Ministry of Home Affairs has prepared this manual to disseminate Cyber Hygiene Best Practices for the benefit of Industrial Bodies/General Public/Government Officials. This should not be considered an exhaustive list of precautions for Cyber Hygiene but baseline precautions that are to be taken.

Computer safety tips

USB device security

Password security management

General Internet Safety Precautions

Financial Transactions – Safe Practices

Social Media Platforms – Safety Tips

Mobile Phone Safety

Malware and E-mail Security Practices

Above mentioned is how the Indian government is promoting cyber security, emphasizing email security practices in social media. However, in the next section, we will describe various steps taken by the government to promote cyber security, especially for students.

Describe Various Steps Taken by the Government to Promote Cyber Security For Students

The cyber-attacks are becoming highly challenging as well as sophisticated nowadays, especially through the usage of social media platforms, emails, chatrooms, and websites, among others.

Email spoofing (a technique used in spam and phishing attacks to trick users into thinking a message came from a trusted person or entity), cyberbullying (using an electronic means of communication to bully an individual), job frauds, banking frauds, identity theft, among others have increased with the time, especially after covid, as it has given a kick start to a new era of digitalization. Though, covid-19 has pushed distinct sectors of the economy to work digitally, which certainly contributes to the growth of the economy, while on the other hand, the same can be seen as a significant cause of the increase in cybercrimes.

Let’s commence with how the Indian government is taking initiatives to prevent cyberbullying is often referred to as cyber harassment under which electronic means are used to bully or harass an individual –

With the understanding of it, let’s move on to how the Indian government is helping in the prevention of cyber-grooming, which is referred to a situation in which an individual, often an adult befriends a child online and builds an emotional connection with the intention of sexual abuse, sexual exploitation or trafficking –

Besides social media, the Indian government, like any other economy is taking appropriate initiatives to prevent cybercrime. Recently, the Central government introduced and launched “Cyberdost” (February 2019) – a Twitter handle that is responsible for creating awareness regarding cybersecurity in order to create awareness regarding the same, @cyberdost has tweeted 1066+ tweets containing videos, images, and creatives providing general safety tips to prevent cybercrimes or attacks.

Besides this, we have to dive a little deep into how the Indian government is promoting cyber security, then we would like to highlight that the Indian government has actively engaged in –

Radio campaigns
SMS sharing with respect to creating awareness against cybercrimes
Publicly publishing videos, images, and creatives providing general safety tips to prevent cybercrimes or attacks
Publication of Handbook emphasizing “cyber safety of adolescents or children”
Publication of Best security practices to reduce or prevent cybercrimes against government bodies
Cyber safety and security awareness are being organized through C-DAC along with Police Department of various states

All such measures have been taken keeping the mission of preventing cybercrime.

Conclusion

Just like the entire world, the Indian economy is also considerate regarding the problems introduced by cyber security. This blog highlighted how the Indian government is promoting cyber security, we would like to emphasize that, be it issuing measures, tips, and practices to be followed to prevent cybercrimes with respective departments or ministries, the Indian government has formed the relevant policies and measures to prevent such hideous actions, which does not only cause loss of money but affects the life of a person.

Besides this, the Indian government has successfully introduced and implemented Acts and schemes to prevent cyber security attacks or crimes, such as Information Technology Act, 2000 (IT Act), Indian Penal Code, 1860, and Information Technology Rules (IT Rules), among others. Also, considering the risk imposed by cyber crimes, the Indian government has appropriately included daily obligations to be complied with by the corporate stakeholders to restrict the same issue. The Indian government has dedicated most of its resources not only to making India a developed country, however, also to preventing the breach of information through incorporating legal and technological advances without compromising digitalization.

Written & Compiled by CA Sunil Kumar Gupta

Founder Chairman, SARC Associates

sunilkumargupta.com

India GDP in Trillion: A Path to Become a $30 Trillion Economy

by Sunil Kumar Gupta | Oct 11, 2022 | blog

The bold and big thinking of Indian leaders is pushing India to become a $30 trillion economy in the next 30 years.

In a short span of a year, the Indian economy has quickly expanded, from the timely action of the RBI to tame inflation to expanding consumption – India is skyrocketing towards growth and development.

Recently, India has emerged as one of the most powerful countries, since it surpassed the UK to become the 5th largest world economy. However, a question is still being asked whether India can put itself forward as a $30 trillion economy.

Certainly, India holds the potential to become a $30 trillion economy which is clear from the fact that the nominal GDP (GDP at the current rate) has taken a big swing in the April-June quarter, i.e., Rs 64.95 lakh crores, according to the June rupee-dollar exchange rate it stands at $823 billion.

Moreover, it is also claimed that India surpassed the UK’s GDP in March itself, which was $813 billion, while India GDP was $864 billion.

However, as per 2021 April’s GDP outlook report of the International Monetary Fund (IMF), India’s GDP ($3.18 trillion) was right behind UK’s GDP ($3.19 trillion) in 2021. Conversely, it has also been anticipated that India would become a $3.54 trillion economy by the end of 2022 if compared to the UK’s projected GDP which would be $3.38 trillion.

From the estimated data and India GDP growth, it can be seamlessly prognosticated that India will soon become a $3.54 trillion economy by the end of 2022 considering its present growth.

Although, in which year it can become a $30 trillion economy will depend on many factors.

With that, let’s see some facts, how the India GDP surpassed the GDP of the UK?

How India GDP Growth Has Surpassed the UK

The timing could not have been more auspicious when India emerged as the 5th largest world economy at midnight after the entire country celebrated Azadi ka Amrit Mahotsav, that’s its 75th Independence day. Moreover, after overtaking the UK, India is all set to skyrocket to be the third-largest world economy by 2029.

The path taken by India since 2014 reveals it is likely to get the tag of the third largest economy in 2029, a movement of seven places upward since 2014 when India was ranked 10th. India should surpass Germany in 2027 and Japan by 2029 at the current rate of growth (as per estimated figures).

From the estimated data, it can be safely projected that India has been moving in the right direction, and we can conclude that India GDP rank will surpass the world economic leaders in the coming years.

How India pipped the UK, our colonial rulers –

How India's GDP Growth Has Surpassed the UK

Due to pent-up demand, the consumption in the service sector is bouncing back, as consumers are stepping out and spending (as per 2019-2020 data). One of the major reasons for the increase in demand is the “ abundance of festivals” celebrated in India.
While the world is on the brink of recession, our economy is growing by 7%.
As per the Finance Secretary, the government is on the pathway to meet the fiscal deficit target of 6.4% (Rs. 16, 61,196 crores) in the current fiscal year ending in March 2023, while currently, it is Rs. 15, 91,089 crores as per revised estimates for 2021-22.
The Real Gross Fixed Capital Formation of the country is expected to grow by 6.8% (2021-22), previously it was -9.8 (2020-21).

Yet, with the commendable achievement of India, one aspect which can not be ignored is, that “the per capita income of India is low, as India ranked 144 positions out of 190 countries.”

It indicates a clear picture of poverty, income disparity, and our inability to account for inflation, wealth, or saving, therefore, even after achieving the milestone of being recognized as the “world’s fifth largest economy” the Indian economy is lagging behind in distinct aspects.

Whether India Will Be Able to Transform Itself Into a $30 Trillion Economy or Not | India GDP Growth

India GDP growth in the last 10 years, reflects a meritorious change, as it jumps to 8.9% in 2021 from 5.5% in 2012, especially after sinking as low as -6.6% in the previous year.

With the magnificent elevation in GDP of India, it can unequivocally be noticed that we are perfectly poised on the passageway to aspire to be a $30 trillion economy in the next 30 years. Though, it seems like a far-fetched dream, yet, beyond doubt it’s not rocket science as with our magical power of demographic dividend, youth power, and power of democracy – India can proudly establish itself as a $30 trillion economy.

Although, India encounters varied stumbling blocks to be finally crowned as a $30 trillion economy, such as –

The Economic Issues in India

1. Low Per Capita Income

Even after 75 years of Independence, India continues to be a developing country, whose one feature is low per capita income. However, in 2020-21 low per capita income has dropped to Rs 1.27 lakh from Rs 1.32 lakh in 2019-20, while in 2021-22 it is estimated to be 1.50 lakh.

Apart from this, the problem of unequal distribution of income exists in India, which is one of the significant contributors and obstacles to economic development.

Proposed solution –

Increase in farmers’ income – India’s 54.6% of the population works in the agriculture sector and historically, India has always kept prices of agricultural products low. However, due to the introduction of schemes like the Farm Acts, the Indian government can allow farmers to earn high profits. Therefore, with the increase in profit of farmers, they can provide support to the other economic sectors through their consumption. For instance, products like fertilizers, working attire, and tools are a necessity for farmers, especially if they are planning to expand their business. So, this increase in expenditure will generate more job opportunities.
Urbanizing India’s rural population – Urbanization drives growth, due to the prominent nature of the Indian agricultural population, moving certain farmers into rural areas could allow them to generate employment and increase agricultural productivity by minimizing the working of a number of farmers on the same land. Therefore, it will help in growing India’s medium-sized cities. Moreover, the Indian government can promote migration by providing incentives to farmers, including investment in infrastructure development and urban services. Further, the new urban population will generate a resurgence of the housing market and provide more lending opportunities to banks. This in return will result in more development and urbanization, thus, would create more international investment and manufacturing export opportunities.

2. Dependence on Agriculture

Over 54.6% of the population is dependent on agriculture to earn a livelihood, which only contributes 20.2% to the national income, reflecting low productivity. Fortunately, in the Union Budget 2022-23, Rs 1.24 lakh crores have been allocated to the Department of Agriculture, Cooperation, and Farmers’ Welfare.

The measures are taken by the government, such as financial and the introduction of policies, positively solve the problem of individuals working in the agriculture sector.

Proposed solution –

Technological advancement – Apart from increasing the farmers’ income and urbanizing India’s rural population (earlier mentioned points), the Indian government can emphasize on the introduction of technologies in agriculture. Since, technology can assist farmers in predicting the climate, decreasing water usage, increasing yield, and their net profit margins. That in return increases India GDP growth rate.
Digital Credit Policy – Though the Indian government has already launched several credit policies to ensure easy access to loans with fewer legal formalities, yet, farmers could not able to avail the benefits of credit. That could be solved by combining easy access to loans with a digital credit policy, under which loan filing would become much simpler.

3. High Population

Another factor, which is the stumbling block in economic development is heavy population pressure. Contemporary, India is the second most populous country, after China, yet, the per capita income of our country is low, which results in income disparity, and the inability to account for inflation, wealth, or saving.

Further, in order to take care of the well-being of the population of the country, the government has to allocate high funds to fulfill basic requirements like food, shelter, medicine, schooling, electricity, hygiene, and more.

Proposed solution –

India can put more emphasis on programs like “AI for Youth” under which youth will be trained to be future-ready for AI development. Therefore, will commence the trend of entrepreneurship and contribute to India GDP growth.
To create “future entrepreneurs” the government can put more emphasis on the improvement of the soft skills of a student which are core for all professionals, rather than emphasizing on traditional studying methods.
Preventing the migration of India’s youth to other countries (to search for better opportunities) can be done through the creation of better jobs in all sectors.
The Indian government could provide subsidiaries to scientists, engineers, and other students (youth) who persist in talents but lack financial support.
Females/ women should be prepared to lead the fields which are considered non-fit for them, that’s how we will have another Sarla Thukral, Mithali Raj, and more.

4. Existence of Under-employment And Chronic Unemployment

Unemployment of any kind is a curse of any economy, be it developed or developing, and being a developing country, India is also encountering similar problems. Therefore, due to the abundance of labor, it is challenging for the government to generate employment opportunities for the entire population.

In addition to that, due to a deficiency of capital, secondary and tertiary occupations are inadequate, which results in under-employment and chronic unemployment.

Proposed solution –

Unemployment is a constant problem in the Indian economy and the Indian government has introduced several schemes to minimize unemployment such as Atmanirbhar Bharat Rojgar Yojana, Pradhan Mantri Rojgar Protsahan Yojana, etc. However, India’s world-beating growth is not creating as many jobs, considering that India should put more emphasis on improving the education system and job training.
Even though the employment rate has increased, employers couldn’t hire due to a lack of skills in freshers. Therefore, there is a need to give importance to the soft skills of students.
The Indian government can invest in the establishment of more industries and infrastructure development projects to minimize under-employment.
Training in the workplace, youth employment services, and career education could be a great way to improve skills, create more entrepreneurs, and allow students to choose the right career.

5. Leisurely Improvement in Rate of Capital Formation

From the beginning, one thing that pertains is a deficiency of capital in India, though, in 2021-22, the Gross Fixed Capital Formation of the country is expected to grow by 6.8%. Therefore, reflecting positive growth, yet, considering the high population growth, India could use better measures to increase the rate of gross capital formation.

Proposed solution –

Saving and investment from household savings or government policy need to be increased by improving the money flow, that in return increases the private investment or fixed asset acquisition. Therefore, increase in gross fixed capital formation.
Resident enterprises in the country can be increased to increase the gross fixed capital formation. For instance, oil extraction occurs in open seas, so the associated fixed capital is allocated to the national territory, in which the relevant enterprises are resident.

The mentioned economic issues have many potential solutions (as mentioned above) and it is no doubt that with time India has made progress in many fields.

Certainly, from the 5 worst economies in the world to the world’s 5th largest economy, India has truly proven it’s worth and how its leaders have been working in all directions to tame the world to see India growing and expanding as a world power.

What Are The Strengths Of The Indian Economy?

India, the fastest growing economy has to realize the strengths of demographic dividend, youth power, and the power of democracy. It is no doubt, from the year 2014 to 2022, India has witnessed tremendous growth in distinct aspects – be it science and technology, innovation, agriculture, the service sector, or digitalization.

Under the leadership of Hon’ble PM Modi Ji, India has built a modern economy, lifted millions of individuals from poverty, become a space and nuclear power, and developed robust foreign policies.

Since 2014, India has come a long way, leaving a string of landmarks, which defines its journey. This section of the blog will trace the strengths of the Indian economy and India will become a $30 trillion economy.

1. Mixed Economy

The Indian economy is a perfect example of a mixed economy, which means private and public both sectors co-exist in India and function smoothly. On one hand, the public sector operates on heavy and fundamental industries, while on the other hand, private sectors have gained importance (due to liberalization).

That provides a model for a “public-private partnership” where both, private and public sectors can work together through the adequate contribution of financial resources, management expertise, technology, and other resources.

2. An Emerging Market

India has emerged as a vibrant economy, which contributes to the stable the India GDP growth rate, even amidst global downstream, India continues to show positive India GDP growth trends, especially with the introduction of policies such as an automatic route for FDI in India, including measures taken by the government to attract domestic and foreign investment such as –

Empowered Group of Secretaries (EGoS) Project Development Cells (PDCs)
Production Linked Incentive (PLI) Schemes
PLI Scheme
Make in India
Investment Clearance Cell (ICC)
One District One Product (ODOP) and more.

All the initiatives taken by the Indian government reflect the high prospect for growth.

3. Expansion in The Role of Agriculture

As mentioned, the largest part of our population is engaged in agriculture, which also contributes to the India GDP growth of the country. The introduction of the “green revolution” and other “bio-technological” improvements in agriculture has made Indian agriculture more efficient and has increased the surplus too.

Including that, government initiatives such as PM Fasal Bima Yojana (PMFBY) (provides insurance on naturally grown crops,) Paramparagat Krishi Vikas Yojana (PKVY), and National Project on Organic Farming schemes – have pushed our agriculture sector towards growth. Moreover, PM Modi Ji’s government has also been working to incorporate AI in agriculture, which will again be an immense step towards development.

4. Service Sector

Due to liberalization and economic reforms India’s service sectors are flourishing, especially with the introduction of schemes like Make in India, and Digital India Mission, including schemes to boost the “12 champion service sectors” that are IT & ITeS, Tourism, and Hospitality, Medical Value Travel, Transport and Logistics, Accounting and Finance, Audio Visual, Legal, Communication, Construction, and Related Engineering, Environmental, Financial and Education – India is truly making immense progression in the service sector.

The service sector is the largest sector in India, estimated to grow by 8.2%.in 2021-22, after a contraction of 8.4% the previous year.

5. Demographic Dividend

The human capital of India is young, which reflects that India is a proud owner of the maximum percentage of youth. The “youth” is not only highly motivated but also the greatest asset of a country, if skilled and trained adequately. And in order to provide diversified training to the youth, Hon’ble PM Modi Ji’s government has introduced schemes such as –

Pradhan Mantri Kaushal Vikas Yojana (PMKVY)
Craftsman Training Scheme (CTS)
Pradhan Mantri Kaushal Kendras (PMKK)
Scheme for Higher Education Youth in Apprenticeship and Skills.
National Apprenticeship Promotion Scheme.
National Programme for Civil Services Capacity Building.
Green Skill Development Programme.

With the introduction of such programs and schemes, the Indian government is constantly taking measures to train and enhance the skills of youth, in order to create human capital to maximize the growth prospects of the country.

Moreover, the availability of maximum human capital in India attracts investment opportunities in India, hence, contributes India GDP growth.

6. High Purchase Price Parity (PPP)

Purchase Price Parity (PPP) refers to the rates of currency conversion, which tries to equalize the purchasing power of other currencies by obliterating the differences in price levels between countries.

The PPP of India stood at 23.14 in 2021, which reflects that India is one of the countries with the highest PPP. That means that the same product would cost less in India, than in other countries, for instance, the price of the same shoes would be high in the US, say $50 (3,982.53), however, would say Rs 2000 in India.

This opens up the possibility of exports to other countries, since raw materials are economical in India, thereby contributing to India GDP growth.

7. Rapid Growth of Urban Areas

Urbanization is one of the keys to improve the growth of the economy and under the leadership of Hon’ble Narendra Modi Ji several measures have been taken to provide distinct facilities in rural areas such as electricity, schools, employment, banks, and financial institutions, transportation facilities, and more.

Along with that, more scheme has been introduced with the purpose to ensure further development, such as –

Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS)
Shyama Prasad Mukherji Rurban Mission (SPMRM)
Aadarsh Gram Yojana (AGY) :- SAGY, VAGY & SPAGY.
Pradhan Mantri Adarsh Gram Yojana (PMAGY)
Pradhan Mantri Jan Vikas Karyakram (Center 60 : State 40)
Swaranjayanti Khand Utthan Yojana (100 % State

8. Digitalization

Digitalization in India, once a traditional country, is now a home of AI system designers and will soon become an AI hub, especially when the government is taking adequate measures to support digitization. India stands 4th in the largest producer of AI-relevant scholarly papers and has introduced initiatives like AI for Youth (commenced in 2020) to make the youth future ready for AI developments.

Apart from that, our hon’ble PM also talks about making work from home a reality, which will allow more women to participate in the workforce, ensure energy saving, and will allow youth to manage studies and work conveniently.

9. Science and Technology (AI)

India is among one of the top countries in the world and in order to be successful in science and technology, the Indian government has launched schemes like INSPIRE “Innovation in Science Pursuit for Inspired Research” or “Abdul Kalam Technology Innovation National Fellowship”, and other schemes with the purpose to encourage innovation in this sector.

It is no doubt that India is prosperously achieving success through launching Mission mars, or GSAT- 19.

10. Startup Hub

With the introduction of startup culture in India, India is becoming a startup hub, since due to schemes introduced by the Indian government, now startups are receiving concessions, subsidiaries, and more.

Some of the schemes are –

Pradhan Mantri Mudra Yojana.
Credit Guarantee Trust Fund for Micro & Small Enterprises (CGTSME).
Financial Support to MSMEs in ZED Certification Scheme.
Credit Linked Capital Subsidy for Technology Upgradation (CLCSS).
Design Clinic for Design Expertise to MSMEs.

Conclusion

India has overthrown one of the cultural, technological, and scientific leaders by conquering the position of the world’s fifth-largest economy, thereby, reflecting an increase in India GDP growth.

India has always strived hard to adopt the best possible measures and strategies, which are in the interest of the economy as a whole and which have wider political and economic implications for the country and the world. From our track record, we envision the path of a $30 trillion economy, through a constant emphasis on fair and credible policies and measures that will eliminate unemployment issues, improve technological development and infrastructure, ensure adequate utilization of economic resources, and other aspects associated with economic development.

Moreover, under the guidance of our honorable Prime Minister Narendra Modi, India will soon become a $5 trillion economy and will head strategically on the path to becoming a $30 trillion economy.

Written & Compiled by CA Sunil Kumar Gupta

Founder Chairman, SARC Associates

sunilkumargupta.com

PM’s Deliberations On Easy Lending Norms By Commercial Banks To Fulfil The Requirements Of Needy Enterprises

by Sunil Kumar Gupta | Jan 12, 2022 | blog

During speech at the conference on 18^thNovember, 2021 on ‘Creating synergies for seamless credit flow and economic growth’, our Prime Minister said “Indian banks are strong enough to play a major role in imparting fresh energy to the country’s economy, for giving a big push and making India self-reliant. I consider this phase as a major milestone in the banking sector of India”.

On this great occasion I wish to congratulate the Hon’ble Prime Minister on behalf of the industry, for suggesting various measures to commercial banks for easing out loan delivery process for providing better opportunities to business enterprises and start-ups. Our country’s outlook is now to intensify and spread the economic activities by providing hassle free loans to entrepreneurs. In the post Covid scenario, RBI’s role has to play an important role for boosting up economic activities and encouraging the banks to sanction loans at easy terms.

Prime Minister reiterated that banks have sufficient liquidity and coupled with the fact that now there is no backlog for provisioning of NPAs as NPAs in public sector banks are at the lowest compared to the five years back and this has led to upgrading of outlook for the Indian Banks by the International agencies. The Prime Minister said apart from being a milestone, this phase is also a new starting point and called upon the banking sector to support the wealth creators and job creators. The Prime Minister empathetically said “It is the need of the hour for the banks of India to work proactively to bolster the wealth sheet of the country along with their balance sheets”.

PM urged bankers to identify the productive potential of citizens and go beyond the traditional banking when it comes to nourish their business intelligence and entrepreneurial dreams with quick release of loan funds. PM further stressed upon the need to do away with the feeling that lender is approver and customer is an applicant or receiver. Instead of waiting for the customers to come and seek loans, bankers have to come forward to analyse the credit appetite of both existing and potential customers and provide consultancy services with customized solutions and unified policies. In this way, banks have to adopt the model of partnership in which both partners share the benefits.

The Prime Minister said that due to recent implementation of various schemes, a huge pool of data is now available in the country. The Prime Minister emphasized that the banking sector must take advantage of this facility. He also listed the opportunities presented by the flagship schemes like PM Awas Yojana, Svamitva and Svanidhi and asked banks to participate and play their proactive role in these schemes.

Prime Minister said the scale at which corporates and startups are coming forward today is unprecedented and it is the opportune time to strengthen, fund, invest in India’s economic aspirations.

Reduction In NPA

He quoted detailed reports while saying that NPA ratio of public sector banks has now come down to the lowest during last 5 years and they are flushed with liquidity. PM quoted that public sector banks have recovered around 5 lakh crores of bad loans during last years but such news did not make headlines in core media due to illegitimate activities of some defaulters.

Need For Massive Credit Push

Inspite of the current Covid situation, it is assumed that economy will recover at growth rate of 8.7% to 10.5% during current fiscal. This study sounds good but a massive credit push is essential for businesses to remain operational without hindrance and to expand to new horizons.

Studies have also found that growth rate of non-food bank credit has increased to 6.8% in September, 2021 as compared to 5.1% during same period last year. Industrial loans however have seen the growth of only 2.5%. CARE ratings also hint that weekly average (net) liquidity surplus in banking system grew from Rs.4.5 lakh crores at the end of June, 2021 to around Rs.7.5 lakh crores as of September-end.

Time For Action To Contribute to Economy

Bank’s participation in the growth of nation’s economy is undeniable. Banks maintain strict protocols while sanctioning loans. This exercise makes entrepreneurs to wait for long period and delay the process for unwanted reasons. Bankers must overlook traditional methods to approve loans.

PM assures the banks with dependable words and announced to provide all possible help. It is however important for loan seekers to maintain all records and provide all necessary documents for faster disbursal of loan funds.

Make Loan Dispensation Process Easy And Time Bound

He also appreciated the proposal to set up the web-based project funding tracker. This proposal will make all ministries and banks to work in tandem. PM also suggested adding this proposal as an interface to Gati Shakti Portal. Faster loan disbursal process will also help to effectively cope with other big challenges of unemployment and fund crunch. Access https://www.rbi.org.in/ to read more information.

Conclusion

In view of the abovementioned facts, it may be safe to conclude that the Government is fully committed to support Indian economy by promoting businesses and providing easy availability of funds through banks. It becomes pertinent for banks to be proactive in considering genuine loan requests and make sure that the funds sanctioned are being used only for the said purpose. Misuse of bank funds may land customer and/or concerned authorities into trouble and may attract various penal actions.

In order to find more details on the given subject, you may refer to the author at https://www.sunilkumargupta.com.

“AatmaNirbhar Bharat” Measures: Rs. 20 lakh crores Economic Package 2020

by Sunil Kumar Gupta | May 17, 2020 | blog

We congratulate our Hon’ble PM & FM for announcing the economic package in 5 parts to make India self-reliant (Aatmanirbhar Bharat) i.e. #AatmaNirbharBharat and for better opportunities for post-COVID-19. I am happy to share that some points from my blog published on 9th May 2020 on various social media platforms and where the Government was tagged, also found a place in the package like:

Release of pending payment of MSMEs from PSUs
Increasing the existing loan limit of the MSME sector by 20%, without any additional collateral securities
Creation of a digital market for MSMEs
Ease and deferment of labour law: Now, all occupations have been opened for women and permitted to work at night with safeguards. Major State Governments are now working on relaxing or deferring the labour law applicability
The Indian Government has always been reviewing its policies in the best interest of the country. The focus should now be drawn on improving India’s performance in ease of doing business by reviewing and rationalizing its policies in Dealing with Construction Permits, Getting Electricity, Registering Property, Paying Taxes, Trading across Borders, Enforcing Contracts, Resolving Insolvency, Employing Workers and Contracting with the Government. The government has started working on ease of doing business relating to easy registration of property and fast disposal of commercial disputes for making India one of the easiest places to do business as a part of the next phase of Ease of Doing Business Reforms
Ease of Corporate Law and IBC laws to enhance businesses and to believe in entrepreneurs
de-punitive and de-criminalisation of corporate and business laws:
a) lower penalties for all defaults for Small Companies, One person Companies, Producer Companies & Start-Ups.
b) decriminalization of Companies Act violations involving minor technical and procedural defaults (shortcomings in CSR reporting, inadequacies in board reports, filing defaults, delay in holding AGM).
c) majority of the compoundable offences sections are to be shifted to internal adjudication mechanism (IAM) and powers of RD for compounding enhanced (58 sections to be dealt with under IAM as compared to 18 earlier).
d) 7 compoundable offences altogether dropped and 5 to be dealt with under an alternative framework

All these will enable businesses to complete their pending compliances without payment of any additional filing fees, thereby the entrepreneurs may focus on the growth of their businesses and simultaneously de-clog the criminal courts and NCLT

Read More…

Better Opportunities for India post COVID-19: The World Manufacturing Hub

by Sunil Kumar Gupta | May 9, 2020 | blog

The whole world is struggling hard with the global lockdown during the pandemic COVID-19 and striving to regain its economies. The IMF World Economic Outlook came out with its interesting growth projections stating that the Euro Area is projected to have a de-growth in 2020 at minus 7.5% and projected growth of 4.7% in 2021. They have projected that India will have a better position by attaining 1.9% in 2020 and 7.4% in 2021 as against a contraction in the global economy. India has great opportunity to become a global manufacturing hub and to boost their MSME sector which is the lifeline of the country which eventually contributes 45% of the total manufacturing and 40% of the total exports and provides huge employment to all the skilled, semiskilled and unskilled youth of the country.

The pandemic COVID-19 had its origin in China and it has gradually spread its claws all over the world creating global economic destruction and resulting in Anti-Chinese sentiments in the system. Now businesses and manufacturers are looking for possible alternative locations to set up their manufacturing units. Various companies are planning to shift its manufacturing units from China to India, Vietnam, Thailand, Indonesia, Eastern Europe etc. India is being seen as a viable option to become a global manufacturing destination going forward. Countries like Japan are in talk with the Indian Government to set up their base in India. Market giants like Pegatron Corp., Google, Microsoft, Apple’s manufacturing partner Wistron Corporation are planning to move out of China and set up their manufacturing units in countries like India, Vietnam, Thailand, Indonesia etc. India is one of the good choices for these companies due to its young population, availability of abundant land, skilled labour, low tax rate for new manufacturing units and favorable business environment. As per the World Bank latest 2019 data, in ease of doing business, Thailand ranks at 21, followed by India at 63, Vietnam at 70 and Indonesia at 73. But is this all that is needed?

The entire world now is rethinking to develop their manufacturing niche in their own country or set up their manufacturing unit in any other country except China so as to avoid such devastating loss in the future. This is a brilliant opportunity for India to become the manufacturing hub of the world by pressing the reboot key to start afresh with new ideas and new goals in New India. Hence, it is important to justify why the businesses will shift to India and not to the other countries. Developing India as a manufacturing hub and an economic powerhouse is not like pressing the F5 key on the computer. Not only we have to attract the foreign companies to set up their manufacturing units in India, but also rejuvenate our MSME sector to grow and support our economy and the international manufacturing in India.

Let us now analyze whether doing business in India is really easy as compared to other nations. As per the World Bank study, there are majorly 12 indicators, whose aggregate score, giving equal weight to each indicator, determines the rankings of the countries in ease of doing business and they keep on changing on year to year basis.

*Source: The World Bank

India is one among the top 10 countries which has shown major improvement in 2019 vis-à-vis 2018. After climbing up the ladder, due to business-friendly policies of Modi Government, India is now at 63rd position out of 190 countries with DB Score of 71.0 out of 100 points. These are the 10 indicators of ease of doing business which is prepared by comparing the business regulation in 190 countries and are being considered by the businesses (domestic and international) before starting a new venture:

Sl. No	Indicators	India	Way forward for better ranking by India
1	Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-size business to start up and formally operate in each economy’s largest business city.	136	136 out of 190 is not a good score, we need to at least reach a score within 50 as far as starting a business is concerned. Norms for starting a new business needs to be relaxed and should be made online in time bound manner. Due to the federal structure and the nature of businesses, they has to take several permissions from the Central and State Governments. Thus, a close coordination should be there between both the governments. Though the Ministry of Corporate Affairs has already implemented various steps like reduction of fees for incorporation of Company, introduction of SPICe, formation of a Company in 1 day, relaxation in the minimum paid-up capital requirement for ease of doing business, but we have to review various other compliances applicable for starting a new business and try to reduce the number of procedures, time and cost of the entire process.
2	Dealing with Construction Permits It tracks the procedures, time and cost for obtaining the necessary licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining all requisite connections and permissions.	27	India was at the 52nd position in 2018 as against 27th in 2019. Although India has streamlined the process and improved its quality building controls, with faster and less expensive procedures to get construction permits in Delhi and Mumbai, but for better ranks it is advisable to encourage digitalisation and online approval for easy operation by each of the State Governments. For a better ranking post lockdown, India should now reduce/ minimise the number of procedures for getting the construction permits along with the time and cost of the process and build more effective quality control parameters.
3	Getting Electricity This indicates procedures, time and cost required for a business to obtain a permanent electricity connection.	22	Though we have reached a score of 22 out of 190, but we need to improve the score further. Automated mechanism needs to be set up for supply of electricity connection. Further, more solar and hydro power plants, transmission lines needs to be set up all across the country so that there is no scarcity of supply of electricity. Our country needs to focus on reducing the time, cost and number of procedures for getting the electricity connections and emphasise on reliability of supply and transparency of tariff.
4	Registering Property This is one of the primary steps for any new business to set up. It examines the steps, time, and cost involved in registering an undisputed property i.e. land and/ land along with building.	154	We are at 154th position out of 190 countries, hence we need significant improvement in getting property registered in the name of businesses because owning a land/ property for businesses is one of the most important and critical steps in setting up a new business, wherein there are some improvements. The Government needs to rationalise the land acquisition law and standardise online system of allotment of land by the industrial development authorities. It is also required to work on increasing the quality of land and administration process along with better transparency and reduce/ minimise the time taken, cost and number of procedures.
5	Getting Credit This topic covers two aspects of access to finance—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending.	25	The entire process of getting credit in India needs to be reviewed, relaxed, standardised and made online. The Government needs to strengthen the legal rights of all the parties in the contract as well as transparency in assessing the credit score and expand the scope of information collection and reported by credit bureau.
6	Protecting Minority Investors It measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse.	13	The interests of the minority investors needs to be protected more strictly. Disclosures needs to clearly explain the facts, terms and risks involved, extent of directors’ liability and shareholders rights should be highlighted. Policies for corporate transparency, ownership and control measures needs to be reviewed and rationalised.
7	Paying Taxes It records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions.	115	India has a rank of 115 out of 190, which shows that the Government needs to review its taxation policies and significantly work on getting a better score within top 50. The Government needs to encourage businesses and individuals to pay tax and rationalise their compliances and administrative burden of collection should be bare minimum. They need to work on increasing total tax and contributions received and reduce the tax rates. Computation, compliance, filing and refund of direct and indirect taxes should be made easy. The taxation system needs to be made uniform so that the taxpayers find it easy and just, to pay the taxes and the tax audit processes needs to be reviewed along with rationalising labour taxes and other mandatory contribution (other than tax on profit).
8	Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. It measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods.	68	India has implemented post clearance audits, integrating trade stakeholders in a single electronic platform, upgrading port infrastructures and enhancing electronic submission of documents in Delhi and Mumbai. The Government should now relax the existing laws regulating trade relations between India and other countries except the countries sharing land borders with India. While exporting or importing we have to reduce the time and cost for documentary compliance and border compliance.
9	Enforcing Contracts It measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system.	163	Since India now ranks at 163rd position out of 190 countries as per the World Bank data, the Government needs to stress on putting extra efforts in its system to enforce contracts. India Government should now bring out effective steps to resolve commercial disputes and enforce contracts. The Government should reduce the time to enforce contracts i.e. from the date of filing of dispute till the date of passing the order at the first-instance court with a minimum cost and increase the quality of judicial processes.
10	Resolving Insolvency These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings.	52	After the Insolvency laws, India has made resolving insolvency in a much easier way by promoting existing reorganisation proceedings. Government now needs to work on the effective implementation of the law in line with the international laws. Focus needs to be also drawn in increasing the recovery rate and strengthening the insolvency framework.
11	Employing workers Labour laws to avoid worker exploitation, discrimination of hiring and working policies and unfair dismissal practices vis-à-vis rational and flexible labour laws for the growth of business	Not considered in ranking in 2019	The employing workers indicator measures regulation in the areas of hiring, working hours, and redundancy. A country should have flexible labour regulations, which provides workers an opportunity to choose their jobs and work freely, thereby increasing the labour productivity. India should have easy hiring framework with flexible rules so as to reduce the rate of unemployment among youth and female workers.
12	Contracting with the Government Efficiency in public procurement policy to ensure better use of taxpayer’s money	Not considered in ranking in 2019	The contracting with the government indicator captures the time and procedures to win a public procurement contract. The Indian Government should review and take effective steps to prepare a database which constitutes a repository of comparable data on how efficiently public procurement processes are carried out and which will act as a benchmark to analyze efficiency of the entire public procurement life cycle. The procurement process should be an open unrestricted and competitive public call.

We have seen that since the past few years, India is significantly improving its position in ease of doing business as per the World Bank ranking. Apart from ease of doing, the country has to take some bold steps to come out of COVID-19 setback and achieve its dream of becoming the most attractive manufacturing hub and in establishing new businesses.

a) The biggest challenge for us is to create a lucrative environment for the international businesses by relaxing the compliance procedures followed in the country. The Government shall start easing the punitive and criminality clauses from compliance, business, commercial and labour laws and trusting the businesses so that the investors/businesses can concentrate more on the growth of their business, rather than wasting time on the compliance burdens. Government should rely on the self-declarations being given by the businesses and give them a more work friendly environment. Maximum companies prior to investing in India will compare the entry procedures i.e. starting a business in India, getting lands, enforcing contracts, statutory compliances, penalty and prosecution clauses in compliance, business and labour laws with that prevailing in other countries. The India Government is now focusing on interacting with the businesses and stakeholders of various other countries to set up their manufacturing base in India but the Central and State Governments may set up specific workforce for interacting with the foreign and Indian entrepreneurs and frame guidelines for timely completion of the projects. The said workforce may be formed jointly by the industry experts, professionals and Government representatives;

b) As a matter of continuous endeavor of the Government to promote MSME, enough safeguards are already built in the MSME law which states that for every services/goods supplied by the MSME unit, the buyer needs to make payment as per the pre-set terms but not exceeding 45 days and in case of delay, interest is charged. The Government needs to implement this law strictly and ensure that the dues from the State/ Central Government, PSUs and big corporates are paid to the MSMEs immediately along with the applicable interest. As per the law, MSME registration is very simple through Udyog Aadhaar (https://www.msmeregistration.org), however still a lot of MSMEs are unregistered and not able to get all the benefits allowed to registered MSMEs. The Government needs to ensure that all the MSMEs get themselves registered through the website. The State Governments should also relax or defer the labour law applicability on MSME sector for few years;

c) The Reserve Bank of India (RBI) needs to pump in more funds in the system to fund the MSME sector. The total liquidity injected in the market by RBI values 3.2% of the GDP, which the Government needs to ensure that it flows into the MSME sector. In order to fight the financial crisis caused by the COVID-19, the MSME sector may be granted a moratorium period of 6 months instead of 3 months and immediate fresh business loan may be granted to those MSMEs who do not have any existing loan. The cash flows of the MSMEs may be maintained by enhancing the overdraft limit to 25% without any primary security or otherwise, with repayment schedule starting after 6 months from the date of granting the facility. Further, the Government should strictly implement the ‘Credit Guarantee Fund Scheme’ to make available collateral-free credit upto Rs 2 crore to the micro and small enterprise sector. The Government should also ensure that the banks approve the loan to the MSMEs and the purpose of bringing this scheme doesn’t get defeated. The Government should also relax the norms pertaining to non-performing assets of the MSMEs to release the burden from their shoulders. They should further assure the banks/ financial institutions that in case any loan turns bad in future, the sanctioning authority will not be held liable and they will not be booked by the criminal law;

d) The State Governments has to promote MSMEs in manufacturing and service sectors in B-class, C-class, small towns and villages and link them with digital platforms for procuring raw materials and selling their goods. Though we have a few digital platforms for selling of goods in MSME sector which are run by the Government, but we need such digital platforms which will be run and managed by the MSMEs only and which can be operated in the local language also for easy understanding by the MSMEs.

e) The country’s agriculture sector accounts for 17% contribution in the GDP and has a growth rate of 2.1%. Out of the 138 cr population, approx. 58% population of the country is engaged in the agriculture sector. Since agriculture sector is the prime sector employing the maximum population of India, the Government needs to focus on increasing the percentage of the contribution to GDP from this sector by allowing businesses to invest in this sector by way of PPP model. Accordingly, the businesses can invest at the initial stages i.e. funding the farmer for seeds, fertilizer, labour cost etc. and purchase the entire crop at a price not which is being fixed by the Government. In case of any natural calamity or unforeseen circumstances resulting in loss of crop, the farmers and businesses should get the minimum fixed amount from the insurance company. The businesses may adopt this as their business model. Currently the Government through banks, provides loans to the farmers and if due to some natural calamity or otherwise, the crops get affected, then as a result of various compulsions, the Government has to waive off the loans and it creates a habit of financial indiscipline in the country.

Conclusion:

In this global crisis, each and every country is trying to start afresh and revive back its economic growth and become the new economic powerhouse. The Indian Government has always been reviewing its policies in the best interest of the country. The focus should now be drawn on improving India’s performance in ease of doing business by reviewing and rationalizing its policies in Dealing with Construction Permits, Getting Electricity, Registering Property, Paying Taxes, Trading across Borders, Enforcing Contracts, Resolving Insolvency, Employing Workers and Contracting with the Government. The existing punitive and criminality clauses from compliance, business, commercial and labour laws need to be reviewed and relaxed. Entrepreneurs and foreign businesses should be given a free hand to focus on the business growth and in turn aid in the economic growth of the country.

MSME sector is growing at 10%, which needs to be escalated by establishing MSME in small town and villages and connect them through digital platforms owned and run by the MSME sector in the local language also. The State Governments should relax or defer the labour law applicability on MSME sector and incentivise them link with their production for the next few years. The Government should strictly implement the ‘Credit Guarantee Fund Scheme’ to make available collateral-free credit upto Rs 2 crore to the MSME sector. They should also ensure that the banks approve the loan to the MSMEs and the purpose of bringing this scheme doesn’t get defeated. The Government shall also focus on developing the agricultural sector by allowing investment through farmer-business-government model where Government needs to allow investment by businesses and the minimum price should be controlled by the Government.

Written & Compiled by CA Sunil Kumar Gupta

Founder Chairman, SARC Associates

www.sarcassociates.com;

Better opportunities for New India to become a world manufacturing hub after COVID-19

by Sunil Kumar Gupta | Apr 21, 2020 | blog

Do we actually know where will the world be after 6 months? As the Corona Virus pandemic gradually spreads its claws all over the world, we are trying hard, joining hands, trying to fight the destruction to make the mother earth sustainable. We are maintaining social distancing and lockdown to tackle the ill effects of the virus; the businesses have pressed the pause button and the whole economy is witnessing a downfall. The stock markets were the first in the line to get affected. The travel industry has been massively hit since there were restrictions in travel and gradually it has put a check in the domestic and international travel, although the supermarkets and the online groceries have witnessed a high demand due to the social distancing and the lockdown. Immediately after the outbreak, people had been piling groceries at their home. There has been a major drop in the air pollution post the lockdown and we could see the nature dancing in its own rhythm.

Although the lockdown resulted in a halt in the manufacturing and production chain all round the world, but it is likely that the countries like India, with cheap labour will climb the ladder and end up starting inhouse manufacturing and exports. According to Customs statistics, China’s foreign trade volume in 2019 stood at RMB31.54 trillion, up by 3.4% year-on-year (similarly hereinafter). Exports rose by 5% to RMB17.23 trillion and imports grew by 1.6% to RMB14.31 trillion. The trade surplus increased by 25.4% to RMB 2.92 trillion. In 2019, China’s foreign trade registered a momentum of improving quality amid overall stability. The People’s Republic of China shipped US$2.499 trillion worth of goods around the globe in 2019 along with its various other partner countries. As per the latest available data, it may be seen that approx. 60.2% of products were exported from China and bought by importers in: the United States (16.8% of the global total), Hong Kong (11.2%), Japan (5.7%), South Korea (4.4%), Vietnam (3.9%), Germany (3.2%), India (3.0%), Netherlands (3%), United Kingdom (2.5%), Taiwan (2.2%), Singapore (also 2.2%) and Malaysia (2.1%). With the closing down of the manufacturing and distribution units in China there has been a major drift and scarcity of the imported products and the small scale distribution channels. China posted a $295.8 billion trade surplus with the United States in 2019.

With the major halt in the exports by China, there is a sudden shortage of supply of various products like Phone system devices including smartphones, Computers, optical readers, Integrated circuits/micro assemblies, Processed petroleum oils, Solar power diodes/semi-conductors, Automobile parts/accessories, Lamps, lighting, illuminated signs, Computer parts, accessories, Models, puzzles, miscellaneous toys and TV receivers/monitors/projectors market all over the world.

What’s coming next?

In order to save the entrepreneurs and the industry in this crisis, the Indian Government has been taking certain steps to:

A. Prevent the opportunistic takeovers of the Indian businesses; and

B. Make a conducive environment to make India a global manufacturing hub

The above may be described in details.

A. Prevent the opportunistic takeovers of the Indian businesses:

Check post on the Foreign Direct Investment (FDI):

On April 18, 2020, the Department for Promotion of Industry and Internal Trade (DPIIT) issued its Press Note 3 of 2020 (PN 3 of 2020 Series) whereby they have reviewed the current Foreign Direct Investment (FDI) Policy and has brought in major changes in the policy in order to prevent opportunistic takeovers/acquisitions of the Indian companies due to the current COVID-19 pandemic. According to the release,

“A non-resident entity can invest in India, subject to the FDI Policy except in those sectors/activities which are prohibited. However, an entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the Government

route. Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment.”

Countries sharing land borders with India are Pakistan, Bangladesh, China, Nepal Bhutan and Afganistan. Hence by this Press Note, the Department has allowed both direct and indirect investment in India by any entity or beneficial owner or citizen of that country ONLY by way of Government Approval. The Press Note further says that if there is any transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, resulting in the beneficial ownership falling within the aforesaid restriction/purview, such subsequent change in beneficial ownership will also require Government approval. The primary intent of the Department is to regulate any attempts by Chinese entities/ beneficial owners/citizens to take control of Indian entities which have been affected by COVID-19 lockdowns. Now, fresh infusion of funds by Chinese entities in existing investments in India would also require government approval. The Department is even putting the restrictions on the multi-layered structures, spread across various jurisdictions.

Subsequently, the Securities and Exchange Board of India (SEBI) has issued directives to the custodians for the FPI investments or beneficial interest information of investors coming from China as well as Hong Kong. It is now scanning the hubs such as the Cayman Islands, Singapore, Ireland and Luxembourg to track the direct and indirect investments from China and Hong Kong in the country.

It has been mentioned that the intent of the Department is to curb opportunistic takeovers/acquisitions of the Indian companies due to the current COVID-19 pandemic. Deep down it can be said that post the HDFC Ltd. disclosure on April, 11, 2020, that the China’s central bank People’s Bank of China (PBoC) has increased its stake in the Company from 0.8% to 1.01%, the Department and SEBI has been minutely watching the FDI movement in the country.

B.Make a conducive environment to make India a global manufacturing hub:

i. India the next manufacturing hub:

The effects of the recent lockdown in China were felt by many Japanese, Korean and other manufacturers which witnessed the supply of components for their factories grind to a halt since factories in China shuttered. Now, various companies are planning to shift its manufacturing units from China to the different other Asian states. Countries like Japan are in talk with the Indian Government to set up their base in India. Market giants like Google, Microsoft, Apple are even planning to move out of China and set up their manufacturing units in countries like Vietnam, Thailand etc.

India will be a very good choice for these companies due to its extremely cheap labour cost, maximum workforce base, favorable diversified weather conditions and huge area in the country.

ii. Self reliant:

As a result of the complete shut down of the economic activity, India along with other countries is expected to face a downfall in the GDP in the 1st quarter of the Financial Year 2020-21. Although from the second and third quarters, it is expected to witness a steady growth with the increase in in-house manufacturing and supply as per the market demand. There is ample opportunity for the SMEs in India to regularize the global supply chain disruption caused by the outbreak of the pandemic COVID-19. India has less dependence on China for the intermediate goods and with the added factor of cheap labour and lower manufacturing cost, the manufacturing sector will see a boom in its growth history. India can easily manufacture the various consumer products and export both the raw materials and the finished products in large scale.

iii. Employment Generation and Government support:

Although the sector wise production is expected to decrease in the recent times, but there is huge scope of employment generation in the coming days. The Indian Government has been reviewing its policies in order to combat this crisis and have even come up with its recent decisions on easing of Working Capital Financing, infusing liquidity in money markets, Greater access to MSF (Marginal Standing Facility), Permitting Banks to Deal in Offshore Non-Deliverable Rupee Derivative Markets (Offshore NDF Rupee Market) etc. Moreover, the RBI has already infused INR 280,000 crore, equivalent to 1.4% of Indian GDP, which along with the current tools announced by the RBI will result in liquidity injection of 3.2% of the GDP and is fully prepared to take ‘whatever tools are necessary—all instruments, conventional and unconventional are on the table’. Consequently, surplus liquidity in the banking system has increased sharply in the wake of sustained government spending.

Regional offices of the RBI have supplied fresh currency of INR1.2 lakh crore from March1 till April 14, 2020 to currency chests across the country to meet increased demand for currency in the recent scenario. RBI has even undertaken measures to target liquidity provision to sectors and entities which are experiencing liquidity constraints and/or hindrances to market access. It has been decided to conduct targeted long-term repo operations (TLTRO 2.0) for an aggregate amount of INR 50,000 crore, to begin with, in tranches of appropriate sizes. As confirmed by the RBI in the recent press release, the apex bank will review the operations and the situation and accordingly may increase the amount as per the requirement.

iv. Trade Balance:

Foreign direct investment (FDI) is one of the major sources of non-debt financial resource for the economic development of India. Foreign companies invest in India to take advantage of relatively lower wages, large consumer base, special investment privileges such as tax exemptions and for the benefit of ease of doing business.

According to the report shared by the Department for Promotion of Industry and Internal Trade (DPIIT), FDI equity inflows in India in April-December, 2019 stood at US$36.79 billion, indicating that government’s effort to improve ease of doing business and relaxation in FDI norms is giving positive results. As per the latest RBI Press Note, the trade deficit declined to US $9.8 billion in March 2020 from US $11 billion a year ago. After the economic activities resumes its operation post COVID-19, the Current Account deficit may be reduced by increasing the export on a large scale and decreasing the import of goods.

v. Growth in the Agricultural Sector:

The country’s agriculture sector accounts for 17% contribution in the GDP and has a growth rate of 3.4%. Approx. 55 cr population of the country is engaged in the agriculture sector which tantamount to 58% employment generation. Since agriculture sector is the prime sector employing the maximum population of India, so the Government focusses on increasing the percentage of the contribution to GDP from this sector. It has even been observed that by April 10, pre-monsoon kharif sowing had begun strongly, with acreage of paddy – the principal kharif crop – up by 37% in comparison with the last season. India has set up an ambitious goal of doubling farm income by 2022.

The farmers should now have a direct reach to the market so that they can sell their products in the market directly and at a reasonable rate; use of new techniques and technology to be introduced to attract youth to this sector and ultimately achieve better production and exports.

vi. Growth in GDP:

With the massive side effects of the pandemic spread, our dependence on the import of raw materials and consumer goods will be curtailed forcefully. Service industry will grow extensively, and tourism industry will be linked with the healthcare sector so as to give an added benefit to the youth employed. As per the RBI report, India is expected to post a sharp turnaround and resume its pre-COVID pre-slowdown trajectory by growing at 7.4 per cent in 2021-22. As the trade balance is maintained, Indian GDP is expected to make a remarkable growth in the next few quarters.

Steps already taken

The Indian Government had recently announced economic package of INR1.7 lakh crores under Prime Minister Gareeb Kalyan Yojana to protect the poor citizens of the country from the economic impact of the nationwide lockdown and decided to defer the Tax and regulatory payments along with compliance filings as a relief to combat the existing crisis and for easy governance. The apex Bank has also come up with some positive arrangements to infuse liquidity in the market and control the turmoil. Some of the steps taken may be highlighted as below:

a) Money markets were facing pressures from redemptions by mutual funds. The Targeted Long-term Refinancing Operations (TLTRO) will ease the liquidity position of the banks, for which they were supposed to invest in investment-grade bonds, commercial paper etc. In order to reduce the adverse effects on the economic activity leading to pressures on cash flows, the RBI had decided to conduct auctions of targeted term repos of up to three years tenor of appropriate sizes for a total amount of up to ₹1,00,000 crore at a floating rate linked to the policy repo rate. This will reassure the money markets to work without the crunch of funds.

b) The RBI recently issued a press note confirming that they had a talk with the NABARD, SIDBI and NHB and accordingly decided to provide special refinance facilities for a total amount of INR 50,000 crore to NABARD, SIDBI and NHB to enable them to meet sectoral credit needs.

c) The cut of 75 basis points in repo rate is a powerful signal, aimed at lowering the cost of funds. The interest on floating rate housing loans will come down, helping household cash flows. Repo rate has come down to 4.40 % from 5.15%. The RBI also cuts the reverse repo rate two times, one by 90 basis points and another by 25 basis points, which has now come down to 3.75% to discourage banks to passively deposit funds with the RBI.

d) Liquidity coverage ratio requirement for Scheduled Commercial Banks has been brought down from 100% to 80% with effect from April 17, 2020.This requirement shall be gradually restored back in two phases – 90% by October 1, 2020 and 100% by April 1, 2021.

e) Health insurance scheme of INR 50 lakh for health workers fighting COVID-19 in Government Hospitals and Health Care Centres has been announced.

f) In order to help the poorest section of the society, a total of 20.40 crores PMJDY women account-holders would be given an ex-gratia of INR 500 per month till June, 2020 to help them run their household during this difficult period. The Government of India has also declared to spend INR 31,000 crores for this purpose.

g) Free gas cylinders, would be provided to 8 crore poor families till June, 2020 and three gas cylinders would be provided to the beneficiaries of Pradhan Mantri Ujjwala Yojana during this period.

h) Under National Rural Livelihood Mission Scheme, collateral free loans is doubled from INR 10 Lakhs to INR 20 lakhs to 63 lakhs Women Self Help Groups(SHGs) which would ultimately benefit 6.85 crore households.

i) It has been now decided that where the time limit of due dates for issue of notice, intimation, notification, approval order, sanction order, filing of appeal, furnishing of return, statements, applications, reports, any other documents and time limit for completion of proceedings by the authority and any compliance by the taxpayer, including investment in saving instruments or investments for roll over benefit of capital gains under Income Tax Act, Wealth Tax Act, Prohibition of Benami Property Transaction Act, Black Money Act, STT law, CTT law, Equalisation Levy law, Vivad Se Vishwas law is expiring between March 20, 2020 to June 29, 2020, it has been extended to June 30, 2020.

j) Taxpayers having aggregate annual turnover less than INR 5 crore will be allowed to file return under Form GSTR-3B due in March 2020, April 2020 and May 2020, till 30th June, 2020 without any interest, late fee, and penalty whereas others having annual turnover more than or equals to INR 5 crore will be allowed to file the same with a reduced interest of 9% p.a. instead of the existing 18% p.a., from 15 days after the relevant due date but without any late fee or penalty.

k) In order to reduce the burden and make the default good, the Ministry of Corporate Affairs has introduced Companies Fresh Start Scheme, 2020 and LLP Settlement Scheme, 2020 with a one-time relaxation to law abiding Companies and LLPs so as to enable them to complete their pending compliances without payment of any additional filing fees, thereby the entrepreneurs may focus on the growth of their businesses.

Recommendation:

An intensive study on the past economic performance of the Indian economy vis-à-vis the global economy and the effects of the COVID-19, a few recommendations are likely to be highlighted for the taking advantage of the better opportunities to the Indian economy:

a) The India Government should now focus on interacting with the business entities and Governments of various other countries to set up their manufacturing base in India. The Central and State Governments may set up specific workforce for interacting with the foreign investors and frame guidelines for timely completion of the projects. The said workforce may be formed jointly by the industry experts, professionals and Government representatives.

b) New guidelines for Foreign Portfolio Investment (FPI) may be introduced in order to safeguard the opportunistic takeovers/ acquisitions of the Indian businesses by way of indirect overseas investments.

c) While calculating the qualifying criteria of the non-performing assets (NPA) the lockdown period and the long-term economic impact of the COVID-19, may be excluded;

d) The Government may incentivize digitalization and facilitate payments through digital mode only and the charges on the credit card/ digital payments may also be waived off;

e) The compliance structure/norms may be diluted for the MSME sector in order to encourage ease of doing business in India. Post the COVID-19 effects, India is expected to have the largest job-market ready for youth population in the world by 2020-21 and this sector is sure to support India in improving its financial inclusion and mitigating the rural-urban divide. Several policy interventions along with technology and innovation will continue to play a pivotal role in creating a business- friendly atmosphere for the MSMEs;

f) There may be a reduction in the short-term GST rate for some specific sectors and further the GST deposit may be linked to the receipt of the amount for the services rendered to balance the cash flows for the time being. Presently GST deposit is based on the invoice raised and not on the payment basis. It can in return reduce the burden on the SME sector and in return reduce the defaults;

g) Tax compliances may be diluted and there may be a reduction in the Tax rate and interest rate on business borrowings in order to give relaxation to the manufacturers and the consumers. Tax rate reliefs may also be allowed to the proprietorship and partnership entities like the Companies;

h) In order to encourage export and reduce import, the Government may bring certain relaxations on the export compliances and also expedite the refund and duty drawback process to stabilize the cashflow operation;

i) There should be compulsory health and life insurance by the Government for the healthcare workers, police, Safai karamcharis who are working endlessly for eradicating this menace.

Conclusion

The recent reforms or policies taken up by the Government clearly demonstrates that the we are leaving no stone unturned to make India a better place to do business and to improve opportunities for all sections of society along with increasing prosperity. India now has the best opportunity to become the economic giant and work as ‘one-size-fits-all’ country and the best business destination in the world. India has always been a friendly partner to the other countries and has now even decided to relax the export of hydroxychloroquine to the USA on case to case basis. It is good to quote that in the coming days India will be the prime source for supply of all essential and life saving commodities to the world. The World Trade Organisation sees global merchandise trade contracting by as much as 13-32 per cent in 2020. Activity in the corporate bond market has picked up appreciably, with several corporates making new issuances. The level of foreign exchange reserves continue to be robust at US $ 476.5 billion on April 10, 2020 equivalent to 11.8 months of imports. India is expected to become the next economic powerhouse with its core competencies.

In order to put a further check on the import of goods, the Government may increase the duty on import of consumer goods and incentive to be given to the MSME sector in order to encourage the production of goods and increase the exports of the country. New technologies are required to be used in the cottage and rural divisions. The government incentives are required to be increased in the manufacturing sector along with easy accessibility of finance and market to the youth so that they can engage themselves in this sector and can start manufacturing without any marketing or financial difficulty.

Written & Compiled by CA Sunil Kumar Gupta

Founder Chairman, SARC Associates

www.sarcassociates.com

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