“Delaying The Inevitable”
(Inevitable: अटल/अनिवार्य; certain to happen and unable to be avoided)
Restructuring of bad loans will get tardier (मन्द; slow or late in happening or arriving) as the bankruptcy (दिवाला;a situation in which a business or a person is unable to pay what they owe or their debts) code is kept in abeyance (स्थगित; a state of not happening at present)
The government has kicked the can down the road (देरी कना; to avoid or delay dealing with a problem) by deciding to keep in abeyance critical provisions of the Insolvency (दिवाला; the condition of not having enough money to pay debts, buy goods, etc.) and Bankruptcy Code (IBC) of 2016 till March 31, 2021.
To recap, because of the large-scale economic hara-kiri (आत्महत्या; “in Japan, especially in the past” a formal way of killing yourself by cutting open your stomach with a sword) triggered by the COVID19 pandemic and lockdown, the government had raised the threshold (सीमा/दहलीज; a point or level at which something starts or change) of loan defaults that would spark off insolvency proceedings (कार्यवाही; the actions that are taken in a court of law) from ₹1 lakh to ₹1 crore on the day of the lockdown’s announcement — March 24.
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It had indicated that if things did not improve by April-end, the suspensions (निलंबन/ स्थगन; the act of stopping something happening for a period of time) of certain sections of the IBC for six months could be considered to prevent companies at large from being forced into the insolvency process for a ‘force majeure (अप्रत्याशित घटना ; an unexpected event which prevents someone from doing something that is written in a legal agreement)’ default.
An ordinance (अध्यादेश/नियम; a law or rule made by a government or authority), in June, indefinitely barred the initiation of insolvency proceedings both, voluntarily or by creditors, for defaults arising on or after March 25, 2020, for a period of six months that could be stretched to a year.
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When the initial six months of forbearance (सहनशीलता; the quality of being patient and being able to forgive someone) under the IBC expired, it was extended till December 25. Union Finance Minister Nirmala Sitharaman’s pronouncement (घोषणा; an official announcement) now, of a further suspension, would mean the one-year limit permitted by the law is fully used up.
The government must make it clear that this is the last such window of respite (राहत; a pause or rest from something difficult or unpleasant), even as the necessity for a blanket suspension of IBC at this point in time is not as apparent (स्पष्ट; seeming to be true) as it was in the first or second quarter of 2020-21.
Frequently Asked SYNONYMS With Hindi Meanings
Stretching the IBC’s abeyance, for one, does not square up (डटकर सामना करना; to prepare to fight, compete, or argue with someone) with the government’s proclamations (घोषणा; an official announcement) of a firm, V-shaped economic recovery. Finance Ministry mandarins (उच्चाधिकारी; a person who has a very important job in the government, and who is sometimes considered to be too powerful) have repeatedly talked up growth prospects by flagging indicators returning to pre-COVID-19 levels, in several sectors.
Surely, businesses in those sectors need no longer be sheltered from exits if they are not competitive. The government, by now, should know which sectors continue to remain in trouble. And if it is concerned about small and medium businesses, it could tweak (सुधार करना; to change something slightly to make it more correct or effective) the default threshold limit a tad (थोड़ा; a little, slightly) higher, while letting bankruptcy processes function again for larger loan accounts.
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But a catchall suspension could burden banks further and does not appear to have enthused (उत्साहित; to express excitement about something) industry either. One reason could be that the suspension also cuts off businesses’ ability to voluntarily enter insolvency — for many, post-COVID-19 operations may not seem viable.
Denying them an exit route so as to cut their losses, while their assets shed value is a lose-lose proposition for both borrower and lender. A more nuanced (सूक्ष्म; a very slight difference in appearance, meaning, etc.) approach would have been better for banks, businesses and the economy.
Delaying the inevitable would mean greater financial stress ahead, as the restructuring and recovery of bad loans shall get tardier and future growth momentum would be punctured at the cost of understating present systemic stress.
 2016 | The Hindu Editorial Vocabulary | With Hindi Word Meanings | 23 December 2020 |){kind=link}
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