Recent Reforms:
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Reforming banking sector:
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Insolvency and Bankruptcy Code(IBC): Since its enactment in 2016, it helped recover Rs 2.5 trillion from corporate defaulters, yielding a recovery rate of 36% as of June 2021.
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Government recapitalized banks and empowered debt recovery tribunals(DRT). A dedicated Stressed Asset Management Vertical was formed.
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Reforming infrastructure:
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Asset Monetisation Program for revenue generation, Productivity Linked Incentive(PLI) Scheme to boost 14 sectors, was launched. Recently, work has started on Asia’s biggest airport in UP.
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National Infrastructure Pipeline(NIP) envisages infrastructure investment of Rs 111 lakh crore over 5 years(FY 2020-25). This huge cost is expected to be met through asset recycling and monetisation and by creating a ‘development finance institution’.
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Reforming PSU’s: Air India’s privatization and others lined up.
What factors are driving the economy’s uplift?
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Lesser covid restrictions: Corporates resume capital expenditure across sectors. Core sectors and IT, pharma, are taking the lead in investments.
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Government push for PSU’s to buy more in order to create a demand and supply cycle. Also, the reduced corporate tax rates with the elimination of many compliances, have made reforms easier.
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Accommodative Monetary policy: The low-interest rates has instilled confidence among corporates to invest more.
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The quick resolution of commercial disputes by making mediation the preferred route rather than judicial litigation.
What is the significance of these reforms?
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The reforms in the infrastructure sector are vital for overall economic growth and recovery.
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Due to its backward linkages, infrastructure reform creates core sector demand. It creates employment too.
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These reforms would pave the way for a ‘digital economy’, and green economy, which will help India to rise over the next decade.