Ease of doing business for MSMEs: The number of cases admitted for the Business Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC), 2016 relating to wholesale and retail increased by 24.8 % in the first quarter (April-June) of the current fiscal year compared to a year ago, according to credit rating company CareEdge’s report on insolvency cases for the first quarter of fiscal year 23. The share of the commercial sector with 567 cases (compared to 454 in June 2021) in the total of 5,636 insolvency cases during the first quarter amounted to 10%.
The manufacturing sector (2,232 cases) accounted for the highest share at 40% while the share of real estate (1,160 cases) was 21%, construction 622 (cases) at 11% and hotels and restaurants ( 121 cases) at 2 percent, among the top five sectors.
While the number of CIRP cases has increased every quarter since IBC was launched in 2016, a large portion of cases have been admitted in the last 12 quarters, indicating growing acceptance of IBC as an effective mechanism. debt resolution, notes the report. Additionally, even as the number of admitted cases jumped 23.5% in the first quarter of FY23 from 4,565 cases in the first quarter of FY22, the number continued to be lower compared to previous quarters of FY19 and FY20, he added.
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Regarding the state of cases during the first quarter, of the total number of cases admitted to the CIRP at the end of June, only 9% ended with the approval of resolution plans, while 35% remained in the resolution process, compared to 37% in June 2021. On the other hand, 30% of the total cases admitted ended in liquidation.
It is important to note that in July last year, the Ministry of MSMEs reinstated retail and wholesale trade in the MSME category, with the limited aim of lending to the priority sector, to the benefit of 2.5 crore of retail and wholesale traders. This decision allowed traders to register on the Udyam registration portal. Between July 2, 2021 and November 29, 5.33 lakh registrations were registered on the portal, MSME Minister Narayan Rane had informed in Lok Sabha last year.
Also read: Government focused on creating benchmark for MSEs in NE by increasing exports, share of GDP, infrastructure, technology: MoS MSME
