Here are some major differences between the Foreign Exchange Regulation Act and the Foreign Exchange Management Act: FERA and FEMA manage India's foreign currency and payments differently. In 1973, the Indian Parliament passed FERA, which took effect on January 1, 1974, to manage and save foreign cuRead more
Here are some major differences between the Foreign Exchange Regulation Act and the Foreign Exchange Management Act:
- FERA and FEMA manage India’s foreign currency and payments differently. In 1973, the Indian Parliament passed FERA, which took effect on January 1, 1974, to manage and save foreign currency at a time of low reserves. FEMA replaced the restricted FERA framework on June 1, 2000, after Parliament authorized it in 1999 to facilitate orderly foreign currency management.
- FERA’s rigorous restrictions reflected the economy and focused on foreign currency management and conservation. A complex 81-section law defined “Authorized persons” carefully and based residence status on citizenship. FERA violations were criminal crimes that carried the possibility of jail and barred legal representation. In addition, infractions were non-compoundable and could not be addressed outside of court.
- However, FEMA’s free and flexible regulation reflected India’s 1990s liberalization ambitions. With just 49 parts, FEMA’s structure is simpler and defines “Authorized persons,” including banks. The past six months of presence in India determines FEMA resident status, not citizenship. FEMA violations are civil infractions punishable by fines, but failure to pay may lead to incarceration. In contrast to FERA, breaches may be settled and the accused can be represented. FEMA added specific directors and courts to streamline appeals compared to FERA Supreme Court appeals.
- FERA’s cautious approach needed RBI approval for FX transactions, limiting operational flexibility. This regulation was repealed by FEMA, making currency transactions easier. FEMA also included information technology requirements to support a modernizing economy, unlike FERA. FERA to FEMA represents India’s transformation from a controlled to a liberalized and growth-oriented economy.
The Bengal Famine of 1943 had severe economic impacts: Agricultural Collapse: The famine led to widespread crop failure, significantly disrupting agricultural production. This resulted in long-term soil degradation and reduced agricultural productivity. Economic Disruption: The famine caused a sharpRead more
The Bengal Famine of 1943 had severe economic impacts:
These impacts contributed to long-lasting economic challenges and reforms in post-independence India.
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