India sees a 25% increase in insolvency cases in Q4 2022, driven by real estate struggles and COVID-19.
By: Priyanshi Mishra
The number of insolvency cases in India has increased by 25% year-on-year in the October-December quarter of 2022, according to data from the Insolvency and Bankruptcy Board of India (IBBI). The increase in insolvency cases is seen as a worrying trend for the Indian economy, which has been struggling to recover from the impact of the COVID-19 pandemic.
The data shows that there were 2,874 cases of insolvency during the October-December 2022 quarter, up from 2,298 cases in the same period last year. The increase in cases was primarily driven by the real estate sector, which accounted for 36% of all insolvency cases during the quarter.
The increase in insolvency cases is seen as a reflection of the ongoing challenges facing the Indian economy. The COVID-19 pandemic has had a significant impact on the country, with businesses across a range of sectors struggling to stay afloat. While the Indian government has introduced numerous measures to support businesses during this time, it is clear that many companies are still facing significant financial difficulties.
Commenting on the increase in insolvency cases, Vishal Garg, CEO of the digital lending platform Better Mortgage, said, “The increase in insolvency cases is a worrying trend for the Indian economy. It is clear that many businesses are still struggling to recover from the impact of the COVID-19 pandemic, and this is having a knock-on effect on the wider economy.”
Garg went on to say that the real estate sector is particularly vulnerable at the moment, with many companies in the sector facing significant financial difficulties. “The real estate sector has been hit hard by the COVID-19 pandemic, with many developers struggling to complete projects and generate revenue. It is no surprise that this sector is driving the increase in insolvency cases,” he said.
The Indian government has introduced abundant measures to support businesses during the pandemic, including a moratorium on loan repayments and the creation of a new bankruptcy code. However, these measures are not enough to support all businesses in the country.
“While the government has introduced many measures to support businesses, it is clear that more needs to be done to help companies weather the current economic storm. We need to see more targeted support for businesses that are struggling, particularly in sectors like real estate,” Garg said.
The increase in insolvency cases is also a concern for investors, who may be reluctant to invest in companies that are seen as being at risk of insolvency. This could have a knock-on effect on the wider economy, as companies may struggle to secure funding and invest in growth.
Despite the challenges facing the Indian economy, there are some reasons for optimism. The country’s vaccination program is progressing well, with over 1 billion doses administered so far. This is expected to help the economy recover as businesses can reopen and consumers feel more confident about spending.
The Indian government has also introduced a number of initiatives aimed at promoting economic growth, including the Atmanirbhar Bharat program, which aims to make India self-reliant in key sectors such as manufacturing and technology.
In conclusion, the increase in insolvency cases in India is a worrying trend for the country’s economy. The COVID-19 pandemic has had a significant impact on businesses across a range of sectors, and it is clear that many companies are still struggling to recover. While the government has introduced a number of measures to support businesses, it is clear that more needs to be done to help companies weather the current economic storm. Despite the challenges, there are reasons for optimism, with the country’s vaccination program progressing well and a number of initiatives in place aimed at promoting economic growth.
