Union Fianance Minister Nirmala Sitharaman addresses the media on Budget at National Media Centre, in New Delhi on February 1, 2025
| Photo Credit: Sushil Kumar Verma

Union Finance Minister Nirmala Sitharaman on Saturday (February 1, 2025) proposed several financial sector reforms to ease compliance, expand services, build robust regulatory environment, promote international and domestic investment, and effect decriminalisation of archaic legal provisions.

For technological advancement in the Banking, Financial Services and Insurance (BFSI) sector, the Minister proposed measures, including allocation of ₹500 crore for a AI centre of excellence and implementation of digital infrastructure for global trade finance.

In her Union Budget 2025-26 presentation, she proposed a light-touch regulatory framework based on principles and trust to ensure productivity and employment.

In a step towards providing a contemporary, agile, people-friendly, and trust-based regulatory framework, she said a High Level Committee for Regulatory Reforms would be set up to review all non-financial sector regulations, certifications, licenses, and permissions.

This committee will suggest measures within a year to strengthen trust-based economic governance and take transformational measures to enhance ‘ease of doing business’, especially in matters of inspections and compliances. State governments would be asked to implement the recommendations at their regulatory authorities for the benefit of the general public.

Investment Friendliness Index of States

Ms. Sitharaman also announced that an Investment Friendliness Index of States would be launched in 2025 to further the “spirit of competitive cooperative federalism”.

Besides, she also proposed to establish a mechanism under the Financial Stability and Development Council (FSDC) to evaluate the impact of current financial regulations and subsidiary instructions and formulate a framework to enhance their responsiveness and development of the financial sector.

To decriminalise more than 100 provisions in various laws, the Finance Minister said she would table the Jan Vishwas Bill 2.0 in Parliament shortly.

Commenting on the likely impact of the Budget on the BFSI sector, Varun Khullar, head (BFSI), LeadSquared, which provides automation tools to BFSI firms, said, “The Budget represents a pivotal development for the BFSI sector, demonstrating India’s dedication to technological advancements and broader financial access.”

He said such measures would create the foundation for improved operational efficiency, enhanced security and greater financial accessibility.

Commenting on the Budget’s focus on the Nyaya Samhita and the Jan Vishwas 2.0 Bill, Ajay Bhargava, Partner, Khaitan & Co, said, “This marks a significant step towards simplifying India’s legal framework.”

“By decriminalising over 100 provisions in existing laws, the government is simplifying legal processes, reducing burden, and fostering ease of doing business in the country. This reform aligns with the broader objective of making laws more accessible and relevant, promoting economic growth while alleviating complexities that hinder operations, particularly for MSMEs,” he added.

Government would introduce the Jan Vishwas Bill 2.0 to decriminalise over 100 outdated legal provisions to achieve greater ease of doing business in the country. Photo used for representation purpose only.
| Photo Credit: Getty Images/iStockphoto

Finance Minister Nirmala Sitharaman announced in the Union Budget 2025-26 speech that the government would introduce the Jan Vishwas Bill 2.0 to decriminalise over 100 outdated legal provisions to achieve greater ease of doing business in the country.

The existing Jan Vishwas (Amendment of Provisions) Act, 2023 has decriminalised 183 Central Acts administered across a spectrum of 19 Ministries or Departments.

The key objective of the Jan Vishwas Act 2023 was to remove archaic provisions that did not serve the evolving technological and business environment.

The Jan Vishwas 2.0 intends to further usher in comprehensive reforms aimed to unburden the judiciary and reduce litigation time and costs. It would introduce civil penalties and administrative actions for minor technical and procedural lapses.

The Minister’s announcement on Saturday (February 1, 2025) follows a Ministry of Commerce and Industry statement in September 2024 that the Department for Promotion of Industry and Internal Trade was “working on about 100 rules and laws of various departments of government to bring Jan Vishwas 2.0 Bill”. The September 2024 statement had termed Jan Vishwas 2.0 a “major step towards aligning India’s regulatory framework with global business standards, promoting investor confidence, and facilitating smoother business operations”.

The 2023 Act had brought in measures such as pragmatic revision of fines and penalties commensurate to the offence committed; establishment of adjudicating officers and appellate authorities; and the periodic increase in quantum of fine and penalties.

Section 3 of the 2023 Act provided that the fines and penalties of the 42 Central Acts would be increased by 10% every three years.

The 2023 Act covers amendments in statutes across a span of over 100 years. These include the Press and Registration of Books Act of 1867, the Indian Post Office Act of 1898, the Boilers Act of 1923, the Indian Forest Act 1927 to the more recent laws like the Prevention of Money Laundering Act, 2002 and the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) of 2016.

In August 2023, a few days before the Jan Vishwas Act, 2023 received the President’s assent, the government had explained that this law was an endeavour to establish a balance between the severity of the offence and the gravity of the prescribed punishment. It was a step to ensure that businesses and citizens adhere to the law without the law losing its rigour.