Corruption post 3/10

Joint Statement Issued by the Ministries of Corporate Affairs, Labor & Employment, Agriculture & Animal Welfare, and Finance

May 2023

Today marks the launch of Phase I of two new Single Window Systems. Last year the Centre ordered exploration of the expansion of the Single Window strategy after the launch of the Maadhyam system resulted in a sharp increase in foreign direct investment. The result was almost universal voluntary adoption of the system by the states of India. As a result India is now one of the fastest growing economies.

For over a year the Ministries of Corporate Affairs, Labor & Employment, and Agriculture & Animal Welfare have worked together to unify all industrial, employment, and agricultural regulations into one database. That database is now the basis of a new Single Window System for all regulations. This will dramatically reduce both the economic and time costs of remaining compliant.

As a result Indian entrepreneurs will now be more agile and can focus more energy on the business of their business. Further this will help level the playing field for smaller businesses who spend a relatively higher proportion of time and money on regulatory compliance. The end result will inevitably be a growth in innovative small businesses which are the key to India’s economic success.

Furthermore, this program will greatly reduce corruption. Informal businesses are plump targets for corrupt officials due to their extralegal nature. This system will dramatically reduce the regulatory burden that forces many hard working Indians to work outside of the law. When they become formal they will gain access to legal protections and the capital needed to grow their business. To further fight the informal sector all informal businesses which formalize in the next two years will be granted amnesty for existing as an extralegal business in the past.

Lastly, the Ministry of Finance is introducing a pilot for a parallel program for taxes. This program will be available to both individuals and businesses. Like the above system this will reduce the burden of regulatory compliance. In addition to again encouraging formalization and reducing corruption, this system is also expected to increase government revenue. Currently few Indians pay income tax. This is largely due to the extraordinarily progressive structure of India’s income tax, but in now small part due to tax evasion as well. Decreasing the difficulty and cost of remaining tax compliant will certainly decrease the incentives to evade taxes.

The Centre is happy to announce that Phase I of these new systems has already begun today in the same fourteen states that participated in Phase I of Maadhyam due to the planning and timing of the development of this program. It is expected that the states that joined Phase II of Maadhyam will join Phase II of the two new single window programs in August as they develop the infrastructure for the systems.