Reducing the barriers to exit
The BLRC has consolidated existing laws on insolvency into one legislation
At an event a few months ago in New Delhi, chief economic adviser Arvind Subramanian described the journey of the Indian economy rather pithily when he said that India moved from “socialism with restricted entry" only to embrace “capitalism without exit". He was simply articulating a long-standing concern on the lack of adequate regulatory apparatus to deal with failed businesses in India. On the parameter of resolving insolvency, India stands at 136 out of 189 countries, according to the Doing Business rankings of the World Bank. While it takes 4.3 years to resolve insolvency in Mumbai with an abysmal recovery rate of 25.7 cents on a dollar, notes the World Bank report, the corresponding figures for OECD (Organisation for Economic Co-operation and Development) high-income countries are 1.7 years and 72.3 cents on a dollar, respectively.
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