Regulatory overreach is injurious to society

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Regulatory overreach is injurious to society

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• Govts and markets: Governments set the legal and institutional system, within which markets have to operate. Govt. has a vested interest in the outcome of these markets, and they way those outcomes are distributed among different groups in society.
• Curtailing services: The govt. may want to curtail some services for social benefit. Decisions in this context can mean 'regulatory overreach', limiting competition and breeding inefficiencies.
• Retrospective taxation: The 2012 law that was brought to tax Vodafone PLC on its capital gains made in 2007, retroactively, has become a big problem for the government. The govt. brought a law to annul the Supreme Court verdict favouring Vodafone, and since then (2012), till date (2021), it has been losing cases on many global forums.
• What forums say: The Permanent Court of Arbitration (The Hague) ruled that India's retroactive demands were in breach of guarantee of fair and equitable treatment. The issue isn't limited to just one legal case, but is linked with investor confidence in Indian trade and commerce. Capricious policy is not good advertising.
• Taxing angel investments: Start-ups in India were shocked when taxmen sent notices asking for capital gains taxes on funds received as equity capital! The taxmen had assumed that if capital infusion was more than the fair value of start-up, using brick and mortar models, then it is a capital gain. That caused panic.
• Inverted duty on tyres: Import duty on natural rubber is more than excise duty on tyres. So manufacturing in India is costlier, and dumping by Chinese is possible. Why was that done? To protect local rubber producers, at the cost of manufacturers of rubber products. But mfg. creates a higher value-add and multiplier for economy. So the plan itself is wrong.
• Amendment to Tobacco Act: A new amendment to "The Cigarettes and Other Tobacco Products (Prohibition of Advt and Regulation of Trade and Commerce, Production, Supply and Distribution) Amendment Bill, 2020". 

1. Provision exists for punishment for selling loose cigarettes, and it's a cognisable offence
2. Such offences are those where police may arrest without warrant (e.g. rape, theft, murder)
3. Can selling of loose cigarettes be deemed such a serious offence?
4. Given the profile of vendors who sell paan, bidis and cigarettes, this will open up vistas for abuse and harassment.

• Summary: While legislating for public health is very important, such mindless laws act contrary to public good, and open up new avenues for large-scale harassment of innocent businessmen. 

Read more on - Polity | Economy | Schemes | S&T | Environment

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