Mission 2020: Government as the enabler of business

As the calendar year 2019 winds to a close, a lot more needs to be done in 2020 to keep pushing the wheels of the Indian economy, especially, with the objective of achieving high economic growth and unleashing the real economic potential of the country.

The year 2019 presented both lessons on the good work that needs to be continued as well as areas warranting improvement as we head into the next year. The focus must be on improving the ease of doing and time required to do business.

The Essar Steel bankruptcy resolution provides a much-required shot in the arm for the bankruptcy resolution mechanism in India.

While the Essar Steel case was complicated and time-consuming as it headed towards the resolution, the ability of the system to resolve a case involving a large quantum of capital shows that the Insolvency and Bankruptcy Code (IBC) is appropriate.

Given the complexities involved in a bankruptcy resolution mechanism and given that it is still early days for the IBC resolution mechanism, the Essar Steel resolution sends a message to companies, investors and the related industries: that India is keen on fine-tuning and further improving the IBC resolution.

More importantly, that the IBC is a crucial component of the business environment in India since it provides an avenue for resolving bankruptcy issues that are a natural concomitant of business is now firmly recognised.

While the Essar Steel resolution provides a template for improvement in significant bankruptcy cases, more considerable attention must still be paid on contract design by lenders to reduce the time required for bankruptcy resolutions should the need arise.