08 March 2004, The Hindu

NEW DELHI, MARCH 7. While describing the “Small Enterprises Bill – 2003” as showcasing progressive intent to streamline and ease off the regulatory pressure on the small enterprises and introducing some long wanted provisions, the Consumer Unity and Trust Society (CUTS) has described it as “a piece of loose drafting missing out on certain important aspects forming the very core of the small enterprise”.

The Bill, proposed to be tabled in the next session of the Parliament after the new Government comes to power at the Centre, signals prima facie a legislative desire to reduce the regulatory burden of the small scale enterprises. It harps on the provisions to modify various regulatory laws, seeking to minimise the role of various labour and taxation agencies, thus, providing sufficient breathing space to small entrepreneurs and allowing them to concentrate more business.

But, a cursory look at the third schedule relating to the inspection of small enterprises, says CUTS, makes it clear that instead of eliminating inspector-raj, which should have been the natural objective of the Bill, the same has been sustained to the detriment of small entrepreneurs.

“Subjecting the small enterprise to the whims and fancies of inspector-raj in an era of liberalisation is an anomaly of the first order. The gross potential abuse of the system that lurks in these seemingly innocuous provisions will deter any entrepreneur to go full steam with his business and instead will always keep him in the lingering fear of raids and seizures. The vicious circle of bribery, unfair trade practices and never-ending litigation that it can unleash goes against the very spirit of the legislation,” says the CUTS analysis.

Also, there is an immediate need, says the frontline consumer advocacy organisation, to incorporate transparent insolvency and bankruptcy laws in this bill itself. “The sickness in the SSI sector is a global phenomenon but nowhere it is punished as hardly as it is in India. In fact, the system in the U.S. allows one to fail and restart without punishing him for failure,” says CUTS. “It is indeed unfortunate to have such a regressive system in India where failed entrepreneurs are sent to jail, their properties are confiscated and they spend the rest of their life facing litigation and ignominy.”

“The system which leaves no scope for correcting and learning from mistakes ultimately becomes a black hole from which nothing creative can emerge. No entrepreneurship can survive under such threatening circumstances,” it says.