India Must Allow Insolvency for Dynamic, Risk-Taking Economy: PM's EAC Member Sanjeev Sanyal

Sanjeev Sanyal, a member of the PM's Economic Advisory Council, asserts that India must embrace company bankruptcies to build a dynamic, risk-taking economy. He argues that continuous insolvency allows new businesses to emerge and strengthens the corporate sector long-term. Sanyal noted that allowing large companies to fail, as observed in 2017, ultimately made the corporate sector stronger by encouraging innovation and risk-taking, which is vital for economic progress.

Sanjeev Sanyal, a prominent member of the Prime Minister's Economic Advisory Council (EAC), has strongly advocated for India to adopt a policy that actively allows for company bankruptcies. He argues that this is a fundamental mechanism to cultivate a dynamic and risk-taking economy. Sanyal emphasized that continuous insolvency should not be viewed negatively, but rather as an essential process that permits new businesses to emerge, innovate, and contribute to long-term economic strength and resilience. He believes this approach encourages the vital elements of innovation and risk-taking necessary for sustained growth. Sanyal highlighted historical examples, specifically mentioning events in 2017 where the allowance of significant corporate failures ultimately led to a stronger and more robust corporate sector. This demonstrates, in his view, that market-driven corrections are beneficial, rather than detrimental, to the overall economic health. By embracing bankruptcies, India can prevent the perpetuation of inefficient or 'zombie' companies that might otherwise drain resources and stifle innovation. This process is crucial for reallocating capital and talent to more productive and forward-looking enterprises, fostering a competitive and agile economic landscape. Sanyal's perspective underscores a strategic shift towards market dynamism and creative destruction, which he deems vital for India's aspirations for high growth and global competitiveness.