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SYNOPSIS OF DEBATES (Proceedings other than Questions & Answers) ______

Thursday, May 05, 2016/ Vaisakha 15, 1938 (Saka) ______

OBITUARY REFERENCES

HON'BLE SPEAKER: Hon'ble Members, I have to inform the House about the sad demise of three former Members, Shri Rana Bahadur Singh, Dr.

Amrit Lal Bharti and Smt. Chandra Prabha Urs.

Shri Rana Bahadur Singh was a Member of the 5th Lok Sabha representing the

Sidhi Parliamentary Constituency of Madhya Pradesh. He was a Member of the

Committee on Petitions during the 5th Lok Sabha. Shri Rana Bahadur Singh worked for the welfare of the farming community.

Shri Rana Bahadur Singh passed away on 4th April, 2016 in Rewa, Madhya

Pradesh at the age of 87.

Dr. Amrit Lal Bharti was a Member of the representing the

Chail Parliamentary Constituency of Uttar Pradesh. He was a Member of the Committee on Food, Civil Supply and Public Distribution. Dr. Bharti worked for the upliftment of the poor and marginalized sections of the society.

Dr. Amrit Lal Bharti passed away on 15th April, 2016 in Allahabad, Uttar

Pradesh at the age of 73.

Smt. Chandra Prabha Urs was a Member of the 10th Lok Sabha representing the Mysore Parliamentary Constituency of Karnataka. She was Chairperson of the

Committee on Labour and Welfare and a Member of the General Purposes

Committee. Earlier, Smt. Chandra Prabha was a Member of the Karnataka

Legislative Assembly for two terms from 1983 to 1985 and 1989 to 1991. She was also Cabinet Minister for Social Welfare, Sericulture and Excise in the

Government of Karnataka from 1983 to 1985.

Smt. Chandra Prabha Urs passed away on 3rd May, 2016 in Mysore,

Karnataka at the age of 69.

We deeply mourn the loss of our former colleagues and I am sure the House would join me in conveying our condolences to the bereaved families.

The Members then stood in silence for a short while. *MATTERS UNDER RULE 377

(i) DR. SWAMI SAKSHIJI MAHARAJ laid a statement regarding

need to renovate Pandit Deendayal Upadhyaya Sports Stadium in Unnao

parliamentary constituency, Uttar Pradesh.

(ii) SHRI RICHARD HAY laid a statement regarding need to increase

green cover in the country particularly in Kerala.

(iii) YOGI ADITYANATH laid a statement regarding need to make river

Aami in Eastern Uttar Pradesh pollution-free.

(iv) SHRI RAMEN DEKA laid a statement regarding updating the National

Register of Citizenship in Assam.

(v) SHRI SUSHIL KUMAR SINGH laid a statement regarding need to

provide water to Sone canal in Bihar from Rihand dam as per the norms

fixed by Joint Operation Committee set up for the purpose.

(vi) SHRI laid a statement regarding need to construct

a new bridge on river Parvan in Jhalawar-Baran Parliamentary

Constituency of .

(vii) SHRI laid a statement regarding

need to construct an over bridge or underpass at level crossing no. 298

* Laid on the Table as directed by the Speaker. between Amali and Rawanjna Dungar railway stations in Tonk-Sawai

Madhopur parliamentary constituency, Rajasthan.

(viii) SHRI THUPSTAN CHHEWANG laid a statement regarding need to

relax the population norm fixed under Pradhan Mantri Gram Sadak

Yojana for Ladakh region of Jammu & Kashmir.

(ix) DR. SATYA PAL SINGH laid a statement regarding need to ensure

payment of arrears of sugarcane to farmers by mills in Baghpat

parliamentary constituency, Uttar Pradesh.

(x) DR. KIRIT P. SOLANKI laid a statement regarding need to set up a

Centre for Excellence of Cotton in Gujarat.

(xi) SHRI DADDAN MISHRA laid a statement regarding need to provide

clean drinking water in all the villages in the country.

(xii) SHRI RAMESH BIDHURI laid a statement regarding need to ensure

construction of earthquake-resistant building structures in .

(xiii) SHRI laid a statement regarding

need to address the problem of acute shortage of drinking water in

Bhilwara parliamentary constituency, Rajasthan.

(xiv) SHRI NISHIKANT DUBEY laid a statement regarding need to set up

three Kendriya Vidyalayas in Santhal Pargana region of Jharkhand. (xv) SHRI CHHEDI PASWAN laid a statement regarding need to start work

on Belwai Reservoir Project in Sasaram parliamentary constituency,

Bihar.

(xvi) SHRI R. DHRUVANARAYANA laid a statement regarding need to

extend the benefits of Dairy Entrepreneurship Development Scheme

(DEDS) to all the farmers of Chamarajnagar district of Karnataka.

(xvii) SHRI NAGENDRA KUMAR PRADHAN laid a statement regarding

problems faced by students of Kendriya Vidyalaya at Debgarh in Odisha.

(xviii) SHRI DHANANJAY MAHADIK laid a statement regarding need to

take measures for the welfare of pensioners under EPS-95.

FINANCE BILL, 2016 - Contd.

THE MINISTER OF FINANCE, MINISTER OF CORPORATE

AFFAIRS AND MINISTER OF INFORMATION AND BROADCASTING

(SHRI ARUN JAITLEY) replying said: The global economy continued to be a cause of concern. The earlier global growth rate was predicted to be 3.4 per cent but now it has been lowered to 3.1 per cent. It may even be lower than that. Asian economy is slightly better compared to the global economy because of the contribution of India and China which raises the average slightly. India is the fastest growing economy among the major countries. The assessment at present is that rains this year would be better compared to the previous year's and perhaps agricultural growth would improve leading to more rural income. The NPA situation in the banks is certainly a cause of concern and the Government is committed to overcome this and would completely support the banks in this regard.

This year also capital would be provided to the banks. Management of banks should be professionalized. Some loans in this regard might have been given on wrong basis which would be investigated. The largest contribution in NPA is due to the steel sector. To solve this custom duties have been increased, certain other steps have been taken and minimum import price has been fixed. Similarly, projects related to highway sector had come to a complete standstill. The

Government infused a lot of funds in the National Highway Authority and in the last two years highway sector is revived in a big way. The price of sugar has gone up slightly. The NPA regarding the sugar sector would improve gradually.

Similarly, regarding the power distribution companies in states 'UDAY' scheme has been introduced. With these measures NPA situation is being addressed. Lot of questions were raised yesterday regarding direct-indirect taxation. Our total revenue for 2014-15 increased by 9.4 per cent. In the previous year this was about

17 per cent. For the first time in this year the actual expenditure exceeded the

Budget estimates instead of being curtailed. The natural aim of the Government taxation policy is to take forward the Prime Minister's Make-in-India resolve. Hence, we make changes now and then to support domestic industry. Another aim is to increase employment in the country. To increase employment we have given lots of rebates this time in the housing sector. Tax on royalty has been reduced to

10 per cent from 25 per cent. Relief has been given for 'Start Ups.' We are gradually moving towards rationalization of corporate tax to align it with globally competitive economies. The Government's effort is that there should be minimum interaction between the Tax Department and the tax payers. Last year Rs.2.10 crore refunds were effected electronically to gradually to do away with interactions. The appeals filed by the department lead to increase in litigation so our target is to bring it down by fifty percent. In all the three budgets of this

Government so far, we have tried to put more and more money in the hands of the small taxpayers. For the first time the exemption limit U/s 80C regarding investment has been enhanced from Rs.1 lakh to Rs.1.5 lakh so that the more the people save less would be tax and the savings would contribute in the development of the country. The aim of the Government is to create gradually a pensioned society- not only for the Government servants but for others too. Hence, one would get additional exemption of Rs.50,000 for investment made in the National

Pension Scheme. The Government has increased the exemption regarding house property from Rs.1 lakh to Rs.1.5 lakh. If the person is buying first house then additional exemption of Rs.50,000 can be availed by him. Additionally, a taxpayers with income upto Rs.5 lakhs the deduction which was Rs.2,000 has been increased to Rs.5,000. For those living on rented properties the yearly exemption on rent is now Rs.60,000. The most important aspect I believe in this budget is that of presumptive income, done for the first time. There are a large number of professionals, architects, directors and self-employed persons in the country. They need not maintain any accounts. Simply a single page return needs to be filed while declaring their income. Similar facility has been extended to businessmen, traders and those running small workshops with yearly turnover upto Rs.2 crore.

For the first time the Government has brought a law regarding declaration of foreign assets which need to be declared. Rs.6,500 crores were assessed in HSBC and Liechtenstein accounts. Large number of people came out with declaration under the black money law. Taxes were paid. Declaration was to the tune of Rs.4-

4.25 thousand crores. Apart from last year, we unearthed black money in the normal procedure through assessment and indirect taxation measures led to

Rs.71,000 crore of black money. Each individual whose name cropped up in the

Panama list has been issued notice. The Congress Party in the 1980s brought the

Bearer Bond Scheme which was called the Black Bonds. How much was the success? It was Rs.964 crore. In 1997 when the United Front Government supported by the Congress came out with the most ill-advised VDIS. It was most ill-advised. No new money came into the system. Most of the declarants were women and minors. The tax evader in 1997 is being given the facility of paying it at the value of 1987 and there was no penalty and no interest on top of it. What we have done in the Black Money case and in the present Budget is not to have offered any amnesty scheme. In the Black Money Act, you pay 30 per cent tax and

30 per cent penalty. If any income has escaped assessment, you can now declare it, but you will have to pay 45 per cent tax. For retrospective taxation cases under our schemes principle amount needs to be paid. This year 33 taxation officials including 7 belonging to Group A were compulsorily retired. And, of the 72 dismissed from service, 6 belonged to Group A. For the Centre and the States together, the tax-GDP ratio is 16.6 per cent. Regarding the question of remission, there is provision of appeal against the final assessment order. For new manufacturing units set up in the country and not claiming any exemption there would simply be 25 per cent tax on profits. Regarding the amount less Rs.5 crore, the tax this year would be reduced by one per cent and gradually it would be brought to 25 per cent. Earning from agriculture is a state subject. Under the new

Land Acquisition Law, there is no tax on acquisition of land and on land compensation. Even though there is no tax but here is a TDS provision of the

Income Tax which applies. So, obviously, there is a conflict. We will try and resolve the anomaly. There is no reason why there should be no tax on gold specially luxury goods. Earlier also I had assured the House we will not let anyone in this trade be harassed. They would have to pay one per cent tax on the quantum of VAT return. There would be no physical verification or inspection. To further simplify this, a Committee has been formed. Tax is levied on the primary manufacturer. This applies on the main retail big showrooms. Not on the job work. One has to understand the gold economy. The higher the custom duty the more the smuggling. In this Finance Bill, amendment has also been effected in the

RBI Act. The Government will see to it that Andhra Pradesh faces no resources crunch. Under the 13th Finance Commission, the undivided State, that is, both

Telangana and Andhra taken together, had got Rs.98,820 crore, in all, all grants taken together from the Centre over a period of five years. Andhra Pradesh has about 52 per cent of the share and Telangana has about 48 per cent of the share.

We have provided to Andhra Pradesh, Central Institutions to compensate them because a large number of Central Institutions have gone to Telangana. In 2015-

16, we have given Rs.21,900 crore which is the right of Andhra Pradesh. For revenue deficit under the Re-organization Act over and above this Rs.21,900 crore, we have given Rs.6,609 crore. We have given another Rs.1,259 crore under the

Commission. For capital, we have already given Rs.2,050 crore. There is a Central commitment on Polavaram and I cannot go back on that commitment. All I want to assure you is that as a State which has lost a lot of revenue after the partition, every rupee that the Andhra Pradesh is entitled to and which it requires is being given. The Bill, as amended, was passed.

INSOLVENCY AND BANKRUPTCY CODE, 2016

THE MINISTER OF STATE IN THE MINISTRY OF FINANCE

(SHRI JAYANT SINHA) moved that the Bill to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interest of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and

Bankruptcy Board of India, and for matters connected therewith or incidental thereto, as reported by the Joint Committee, be taken into consideration.

KUMARI SUSHMITA DEV initiating said: I would say that the

Insolvency and Bankruptcy Code 2016 is an important reform that this nation and this economy has waited for. More than 5,000 companies were undergoing the process of liquidation without reaching its logical conclusion. I feel that for a viable business environment just like start-ups, smooth and efficient methods of exits are equally important. I would say that this Code has introduced some totally new systems and new institutions and a new genre of professionals. They may be individuals like Chartered Accountants or lawyers or even an agency which will have to be registered with the appropriate authority. Apart from that, we have the

Bankruptcy Board. If we pass this legislation and make it the law of the land before or by the 31st May, 2016, I have no doubt that India's ranking by the World

Bank about ease of business will go up by many points. I would like that to happen. There is a clause about recoveries and it has been seen that the

Government of India and the State Government can actually recover dues up to 24 months preceding the date or commencement of liquidation.

SHRI P.P. CHAUDHARY: Earlier, this Bill was placed before the Floor of the House and was referred to the Joint Committee. I am happy that the

Government has accepted the Bill in the amended form. It is needed keeping in view the ranking of India in the Ease of Doing Business Report of the World Bank.

There is no single law in India which deals with insolvency and bankruptcy. The existing framework for insolvency and bankruptcy is inadequate, ineffective and result in undue delay in resolution on account of multiple fora and on account of multiple enactments, on account of conflict of law and on account of conflict of judgements by various courts. Basically, it supports development of credit market and encourage entrepreneurship. It would facilitate more investment leading to higher economic growth, development of credit market. The Code basically seeks to designate the NCLT and the DRT as the 'adjudicating authority'. So, the single authority is there to deal with corporate persons, firms and individuals respectively for liquidation and bankruptcy. The Code separates commercial aspect of the insolvency and the bankruptcy proceedings from the judicial aspect. There are at least 11 laws to deal with insolvency and bankruptcy. Through this Code, all the respective amendments have been carried out in all the 11 laws. This Code will have an overriding effect. This is applicable to all kinds of corporate enterprises, limited liability partnership firms and individuals. The key pillars of the

Bankruptcy Code are the Tribunals, the Regulatory, insolvency professionals, information utility and credit committee. The problem of multiple for a is that there is parallel proceedings and conflict. Now, with this Code, this problem will be solved. This Code provides for protection of interests of labourers and punishment to the violators. Even an MP or an MLA can be disqualified if he is declared bankrupt. But once election is held and he is elected and then he becomes bankrupt, then this provision is not applicable. This provision requires to be looked into again and my suggestion is to cover both the situations, pre-election and post-election. After this Code comes into force, it is necessary to establish sufficient number of various Tribunals. Adjudication authority and the professionals are required to be given proper training and awareness should be created among all the stake holders. In addition, two provisions have been included in this Bill by the Committee with respect to cross border insolvency.

PROF. SAUGATA ROY: In the late sixties and seventies, in Bengal we faced the problem of sickness of industries. One after another, industry used to be closed down. We had to go to the High Court, to go to the liquidator to get the dues of the workers. Even BIFR did not prove to be very successful in reviving companies. Then Debt Recovery Tribunals were set up. When all other Acts and

Tribunals failed, the Government brought the Insolvency and Bankruptcy Code. the problem of sickness remains and workers are the most affected. The

Committee has contributed a lot to improve the Bill. We have to think of ways in which we can make our business viable and profitable. One good thing about this

Bill is that it specifies the time limit. In our Bill 180 days time limit has been fixed and utmost 90 days time extra time can be given. I think, this is a good feature.

This Bill envisages that when a company is going bankrupt, it can go to any

Insolvency Professional. This Bill leaves certain questions in my mind. I am not very clear as to the purpose of establishing the Insolvency and Bankruptcy Fund.

The Joint Committee Report makes the Bill better. Off-shore companies have also been included in the purview of this Bill. The Government should address the problem of NPAs of the banks too.

SHRI TATHAGATA SATPATHY: There are two types of insolvency.

One is, somebody who is a defaulter because of inefficiency. The other is the fraudulent one. This Bill is trying to address insolvency but without really very clearly defining where exactly we want to take this country. First, we have to encourage entrepreneurship in this country. The Joint Parliamentary Committee have definitely put in a lot of their efforts to make the original Government Bill a better Bill but it has not been able to deal with all the problems. First is about the

Information Utilities. There will be multiple Information Utilities and they may not shake the information with each other. To come to another point is the liquidation process. you have the order of priority. The secured creditors will receive their entire outstanding amount first. Then, unsecured creditors have priority over trade creditors. What really bothers me is that we are dealing with the tax payers' money. Why should the Government funds not be cleared first? Why should the taxpayer bear the brunt of some criminal who is duping the banks?

There are no clear guidelines as to how the insolvency fund will be funded and how the fund will be used. I still feel that this Bill is a haphazard Bill and I am not able to support this Bill.

SHRI ANANDRAO ADSUL: There are a number of corporate borrowers, partnership borrowers and individual borrowers. Some of them are willful defaulters as they manoeuvre to evade the repayment of loan in connivance with bank executive and the executives of financial institutions. This resulted in the

NPAs of banks. So, the Finance Minister have struck the very root of problem by introducing Insolvency and Bankruptcy Code, 2016. Liabilities towards the workers, provident fund, pension fund and whatever his legal dues are there will be excluded from the assets of the defaulter during the recovery of loans. With these words I support this Bill.

SHRI JAYADEV GALLA: The Insolvency and Bankruptcy Code, 2016 certainly brings the ease of doing business and makes it much better than it has been before. The key to this Code's working is the new system and structure that is being created - right from the Insolvency Board to the insolvency resolution professionals, the agencies, the information utilities and various things that have been envisioned. The entire insolvency resolution process, depends on the capability of insolvency professionals. So, how long will it take to create such a class of professionals to cover so many different cases is one great challenges.

Moreover, if we do not distinguish between genuine cases and fraudulent cases, then proposed code is not going to bring desired result. It is very easy to liquidate but very difficult to revive and very difficult to start a new company also. So, we have to ensure that the focus is on revival first before it goes into liquidation. I would request the Finance Minister to look into this aspect of situation. In this backdrop, the bank's insistence on personal guarantees goes against the very nature of entrepreneurship and discourages entrepreneurship. I would like the Minister to please look into it and see as to why are banks suddenly tightening up on promoters and insisting on personal guarantees. As far as the NPA is concerned only the promoters should not be blamed and the banks should also come forward to take the responsibility.

SHRIMATI KAVITHA KALVAKUNTLA: The existing insolvency resolution framework takes on an average 4.3 years to solve the issue of a company. But this new Bill proposes to solve all these issues and probably put us on par with the global standards. I believe that this is very important because this is an important criteria in ease of doing business. With the passage of this Bill the position of India will suddenly improve in the World Bank rating. This Bill says that cross-border insolvencies are allowed, but only with countries which also have a similar law in their country. The multiple areas of infrastructure like bankruptcy and insolvency adjudicator and Insolvency Regulator proposed to be created might not be effective in dealing with the defaulters as they have the option to move the

High Court or the Supreme Court. Notwithstanding having the institution like

Reserve Bank of India, the proposal of creating Information Utility does not hold much water as far as giving away the information is concerned.

SHRI MD. BADARUDDOZA KHAN: India has the world's fastest growing big economy. Unfortunately, this big economy is not creating enough jobs for our crores of unemployed youth. On the other hand, non-performing assets are growing day by day due to the willful defaulters. The recovery of huge amounts of NPA has become a never ending process because of the loopholes and complications of Indian laws. So, it was necessary to introduce the Insolvency and

Bankruptcy Code, 2016. All the provisions of the Bill will help the banks to reduce the stress on their balance sheet.

SHRIMATI BUTTA RENUKA: I welcome this legislation on insolvency and bankruptcy which has been a long-overdue. This will also remove the irritants and promote investments both from abroad and within the country. This passage of this Bill will enable quick and prompt action to be taken in the early stages of debt default by a firm, maximising the recovery amount. The creditors will not become victims of red-tape and promoters will directly become accountable for any financial lapses. The new code seeks to cut down the time to less than a year in resolving the debt recovery disputes. The streamlining of procedures, simplifications of the insolvency process and fast-tracking of recovery are hallmarks of the code which will have a positive effect on India's lending climate.

At last, I hope that the Finance Minister will give a serious though to the aspects of appeal process as it will increase the cost of appeal process in the proposed system.

DR. UDIT RAJ: As on date we don't have professionals. But now onwards, care will be taken that professionals are created. A very important point was raised that in the bank also, the responsibility should be fixed on an individual, the persons who is in the bank, who is responsible for advancing the credit.

Otherwise, what is happening is that when the institution as a whole is held responsible, then nobody is accountable for that. To some extent, the person who surveys, who exercises his consent and finally approves for heavy loans, should be held responsible even if he has superannuated. So, I am hopeful when the rules are framed, all these things will be taken. I am very thankful at the end that the

Government has brought out this Code. Of course, it will definitely help in improving the economy.

SHRI GAURAV GOGOI: We hope, through this Bill, the debt recovery percentage would increase to 80 per cent. The fact is that such a law is so important to the health of our economy. Currently, the amount of bad loans in the country is Rs.71,000 crore across major infrastructure sectors. Therefore, banks have stopped lending to industries are not able to expand their projects. So, it is a vicious cycle that is slowing down our economy and putting obstacles to our economy. We talk about ease of doing business but what about the ease of getting a job? In today's India, it is not easy to get a job. In this Bill a new regulator has been proposed. My question is how this regulator will be different from the previous regulator which was the Board of Industrial and Financial Reconstruction.

Thirdly, a new layer of professionals and judges will be required. Has there been any study by the Government as to how many professionals and judges we will need and by what year will we have this vacancy completed. There are a number of existing cases under the current tribunals. What happens to these cases? Will they be now tried under the new law or will they be tried under the existing law?

Many public sector banks provide hardly any credit to projects in the Northeast stating the fact that they have bad debts on their book or they have already given loans to big players. But if the Government wants to grow the economy, it has to improve the credit ratio in the Northeast.

SHRI JAI PRAKASH NARAYAN YADAV: The banking policy should be in favour of poor people. A number of big and rich people fled from India to some other country without paying their dues to banks. Generally, big industrialists reap much benefit of banks by availing loans through tricks and they even do not repay their loans. Hence, stringent action is required against such defaulters. Hopefully, there will be a decline in bad debts through this Bill.

SHRI AJAY MISRA TENI: In fact, the need to introduce this Bill arose as presently there is not a single uniform law in the country to deal with the cases of bankruptcy and insolvency. We all know that the prime objective behind enacting all such laws is NPA. In fact, the banks of our country are undergoing through a difficult phase at present. We all know that it is very difficult to recover loan amount from the willing defaulters and it is also a fact that the number of such defaulters are in large number. By now, banks were able to recover only 12 to 15 per cent of bad debts. But through this Bill, the banks would be more empowered now. The debtors, who declare bankrupts after availing loans from banks, financial institutions and investors, will not be able now to dispose of their assets even in foreign countries. The assets of such bankrupts abroad will now be brought under the purview of this proposed Insolvency and Bankruptcy Code,

2016 and such assets abroad of a person or company will be brought under control of the Government.

SHRI RAJESH RANJAN: I want to give some suggestions. MSMEs should be kept out of its purview. Operations of BIFER should be continued for

MSMEs. Enough judges should be provided on its benches for it to be able to dispose of the pending cases. If the proposed law is being brought as an 'Exit route', then let it be in force with prospective effect for the new companies going to be set up or for those promoters who want to exit their companies. We must try to concentrate and recover the amount from willful defaulters first instead of treating all the borrowers in the same way. The exclusivity period of at least six months should be provided. A panel of experts, having promoters of MSMEs also on board, should be formed to give detailed suggestions in a short time bound period.

But only enacting laws will not add to the development of this country. But, it is the need of the hour to reform the entire existing system in the country in this regard.

SHRI RAM PRASAD SARMAH: The Insolvency and Bankruptcy Code,

2015, which has been amended as 2016 is a welcome step towards improving the ease of doing business and it will certainly help the Indian economy grow faster.

The commendable provision in this Act is the 180 days fixed for resolution of the disputes. It also provides for punishment for those who conceal their source of income or their properties while taking loans or while being indebted to banks or financial institutions. In North-East we have got very limited resources for development. It is very difficult for a poor man to get any loan under the present situation there. There is no industry at all, either small or big. The growth is very slow. So, I would request the hon. Finance Minister to look into the situation that prevails in North-East in general and Assam in particular, which is one of the poorest States in India and encourage banking system in the North-East. The

MUDRA loans and other loans are not percolating to the poor there. Bank officers are to be bribed for getting the loans in the North-East. I would better certainly expect from our Government to provide North-East with better facilities.

SHRI JAYANT SINHA replying said: We had a very good discussion today in the House about this legislation. As you know, the hon. Prime Minister's goal is to reform India to transform India. This legislation is one of those transformational building blocks that will actually be able to transform our economic landscape. Through the legislation we have redressed the balanced of power between promoters and creditors. It is a big transformation. We have gone from a situation where the winding up and resolution process would last from three to ten years, and from 180 to 190 days. We have gone from a situation where we had 12 laws that pertain to the bankruptcy, where you have just one law. Some of these laws which were more than 100 years old have been replaced by a modern

21st century law which is as good as anywhere else in the world. Through the information utilities, there will be a lot of transparency, and a lot of knowledge as to what is happening, who is in distress, and who is not in distress. In that sense, we will be also creating industry with the Bankruptcy Board and the insolvency professionals. This is indeed a major transformation. The other thing that we have done here is we have put employees at the top in terms of protection of rights.

There was a another question that was asked to the Government comes after employees in secured creditors in this waterfall? Obviously, employees are most dependent and most vulnerable. So, we put the most dependent and the most vulnerable tax payers' money ahead of the Government. As far as creditor rights are concerned they are able to trigger default and because of they are able to trigger default, and when the default happens, promoter comes last and this transfers the balance of power from promoters to creditors. In doing so, of course, this also strengthens the corporate debt market so that creditors can then issue debts with a better understanding of the risks that they have to deal with, which means a better pricing of the risks. We also believe that this will lead to a much broader, deeper, more liquid corporate bond market as well. So, it significantly strengthens the corporate debt market. Now, the fact that we are going to put in place this very robust bankruptcy process, hopefully it will reduce the need for personal guarantees because you would be able to recover loans in the bankruptcy process.

Several Members asked about information utilities as to why is it that we need information utilities. The reason is, as I said earlier, we have a very fragmented, opaque insolvency and bankruptcy process that is scattered across different legislations and many adjudicating authorities. By putting in place, these well regulated information utilities and by forcing people to deliver information to these information utilities, we will have transparency in terms of who is borrowing, how much he is borrowing, what is his exposure across the system and an early warning signals to understand as to who could potentially be in distress and whether willful default is happening. By having these information utilities, we prevent these kinds of situations. Finally, there were a lot of Members who spoke about willful defaulters. Willful defaulters are being identified. Over 7,000 willful defaulters have been identified, FIRs have been filed against them and the process for identifying willful defaulters, going after them and taking criminal action against them is very well defined. It is a parallel process from the bankruptcy process and they will both continue to operate as we would like. One hon. Member wanted to know why is it that we are not able to create more jobs. We are, in fact, creating jobs. A lot of jobs are being created in the informal sector thorough initiatives such as Mudra, what we are doing in construction, in public investment and so on.

But I would like to conclude by reminding the hon. Member that it is precisely this type of transformational legislation which will enable the kind of creative destruction that will enable the creation to these jobs. One hon. Member has asked as to what process we have to follow in order to bring into our country the foreign assets of a company which has been undergoing the bankruptcy process in our country. I would like to telling him that even the Bill mentions in detail that we have to enter into cross-border treaties for this purpose. With this law the probability of bringing in those assets rises a lot.

The discussion was concluded.

The bill was passed.

** ** ** **

ANOOP MISHRA Secretary General

**Supplement covering rest of the proceedings is being issued separately. © 2016 BY LOK SABHA SECRETARIAT NOTE: It is the verbatim Debates of the Lok Sabha and not the Synopsis that should be considered authoritative.

English and Hindi versions of Synopsis of Debates are also available at http://loksabha.nic.in.