According to Economic Advisory Council to the Prime Minister (EAC-PM) member Sanjeev Sanyal, India must be at ease with individuals and businesses filing for bankruptcy since ongoing insolvency and bankruptcy are necessary for creating a risk-taking and dynamic economy.
Importance of Constant Churn
A successful economic system, according to Sanyal in an interview with ANI, must allow for “constant churn,” in which established businesses close and new ones spring up to replace them. He emphasized that long-term economic success requires ongoing adjustment.
According to Sanyal, it is sometimes inevitable to let big businesses fail. He noted that in 2017, Indian banks were under a lot of strain, and as a result, the government let some of the nation’s largest corporations file for bankruptcy.
Economic Resilience After Bankruptcy
The corporate sector did not become weaker as a result. After the cleansing, it really returned even stronger,” he informed ANI.
Using the aviation industry as an example, Sanyal said that other carriers were able to grow as a result of Jet Airways’ collapse. He went on to say that businesses should be free to close if they do not adhere to regulations or norms. He said, “We should permit constant turnover.”
Perspective on Business Success and Welfare Policies
Sanyal further said in his interview with ANI that people should not be hostile toward businesses that do well and that success should not be seen negatively. He did, however, add that if big businesses abuse their influence or stifle competition, authorities must step in.
Welfare policies were also a topic of debate. Sanyal said that while he is “very, very uncomfortable with freebies,” he is in favor of providing a safety net for those who take chances.
Culture of Risk-Taking
He said that everyone in society, from a millionaire launching a massive company to someone beginning a little kirana store, has a culture of taking risks. A safety net is required to assist those who “slip over at the edges” because risks may fail.
Sanyal emphasized the strengthening of India’s financial markets, stating that Mumbai is now a more significant hub for capital raising than Singapore or London. According to him, risk-taking capital like venture capital and equity is what propels innovation.
Optimism for the Future
He expressed optimism that the top 20 businesses in India’s stock market will be entirely different from what they are now in 25 years.
Comparing worldwide patterns, Sanyal said that nations like China and the United States continue to be powerful because their top corporations undergo periodic changes. On the other hand, he said that Europe’s biggest corporations had been in a state of “stagnation” for over 30 years.
Bankruptcy as a Normal Aspect
According to Sanyal, bankruptcy “should not be considered as a moral failing” but rather should be viewed as a normal aspect of a society that is prepared to take chances and develop.
