• UGI USER
  • Feb 06, 2024
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CONSENSUS BUILDING AND ENERGY SECURITY IN REFORM AGENDA

Why in the News?

  • Chief Economic Adviser V. Anantha Nageswaran emphasizes the need for fiscal policy to adapt as the economy gains momentum.
  • Recommends periodic reviews of reforms like Goods and Services Tax (GST) and Insolvency and Bankruptcy Code (IBC) for effectiveness.
Source: Medium

Key Highlights:

  • Emphasizes counter-cyclical fiscal policies to tackle economic downturns and withdraw stimulus gradually in recoveries.
  • Government prioritizes financial inclusion and welfare schemes, maintaining a 5.1% GDP target for fiscal deficit.
  • Highlights the need for reforms in health, education, MSME compliance, and energy security, especially in the context of energy transition and discom viability.
About

The Insolvency and Bankruptcy Code (IBC)

·   Enacted in 2016 amid rising Non-Performing Assets (NPAs) and debt defaults, the IBC aimed to revamp India’s corporate distress resolution framework.

·   Consolidated existing laws to establish a time-bound mechanism for resolving insolvency cases.

Key Features:

·   Addressed the prolonged insolvency resolution period in India, which averaged 4.3 years, compared to 1-1.5 years in countries like the UK and USA.

·   Implemented through a parliamentary act.

·   When insolvency is triggered, the IBC offers two outcomes: resolution or liquidation.

·   Resolution attempts involve restructuring or change in ownership, with liquidation as the last resort if resolution efforts fail.

·   Companies must complete the entire insolvency process within 180 days under the IBC.

·   Extensions are possible with creditor consent, while smaller companies and startups with a turnover below Rs 1 crore must conclude insolvency proceedings within 90 days.