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The third element of the exit framework

The system envisaged under the FRDI Bill would help improve the efficiency of capital allocation without harming consumers, and without risking the stability of financial firms

Illustration by Ajay Mohanty
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Illustration by Ajay Mohanty

Ajay Shah
Under Indian socialism, it was difficult to start a business. Many, but not all, of those entry barriers have declined. But capitalism without firm failure is socialism for the rich. Exit frameworks have developed in India, from the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) (2002) to the Insolvency and Bankruptcy Code (IBC) (2016) and now the Financial Resolution and Deposit Insurance (FRDI) Bill. This is slow, hard work, which is the critical institutional infrastructure of the market economy.

Under Indian socialism, entry was blocked into most areas of business. Over the years, many of those
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper

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