Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment
6) Evaluate the role Insolvency and Bankruptcy Code (IBC) has played in improving Ease of Doing Business. Discuss the changes required in IBC in light of Injeti Srinivas Committee recommendations. (250 Words)
Why this question
Insolvency and Bankruptcy Code (IBC) is an important measure of the government in dealing with the problem of NPA in general and the insolvency and bankruptcy resolution mechanism in particular. EODB is a very important policy objective of the current government and India’s success in EODB to a certain extent hinges on success of IBC. Economic Survey has also pointed towards the low success rate of IBC. The Committee’s recommendations are thus a merely a new addition in the ongoing saga that is IBC. Hence this topic needs to be prepared.
Key demand of the question
The question has two aspects that need answering. First of all, we need to evaluate the success IBC has had in improving India’s rank on the Resolving Insolvency metric of EODB rankings. We also need to evaluate the on ground realities as experiences by all sectors of economy with special emphasis on MSME sector. In the second part, we need to write about the reforms required quoting from the Committee’s recommendations.
Evaluate – Here we have to pass a sound judgment on the success of IBC quoting from various sources to bolster our argument.
Discuss – The shortcomings have to be discussed along with the way forward based on the committee’s recommendations..
Structure of the answer
Introduction-Write about the IBC and its relation with EODB.
Body- The first part of the question should be answered in subparts. Impact of IBC on Resolving insolvency metric, on MSME, business houses etc needs to be evaluated. We need to come to a sound judgment here based on our arguments.
Discuss the problems with IBC under broader heads such as easing regulations, simplifying procedures, encouraging creditors along with way forward based on your understanding of the committee’s recommendations.
Conclusion- Highlight the importance of IBC for Indian Economy and how essential it is to bring reforms.