Wrong call on IBC

Govt should not have extended suspension of bankruptcy work

The Insolvency and Bankruptcy Code (IBC) is one of the major reforms of the National Democratic Alliance government. Its purpose is to make the market for capital considerably more flexible and address what former chief economic advisor Arvind Subramanian called “the problem of exit”. A modern bankruptcy law prevents capital being tied up endlessly in litigation and frees it to more productive purposes. This is the context in which observers should evaluate Monday’s announcement by Union Finance Minister Nirmala Sitharaman that the IBC’s normal operation would remain suspended for another three months. The IBC was suspended for new defaults shortly