The Insolvency and Bankruptcy Code (IBC) and its Impact on the Indian Economy: A Quantitative and Qualitative Analysis

Empirical evidence suggests that while the IBC has expedited the resolution of stressed assets, challenges remain. As of September 2023, the average resolution time has extended to 653 days, far exceeding the stipulated 330-day timeline. Recovery rates under the IBC have declined from 43% in 2019 to 32% in 2023, with cases resolved within 330 days yielding significantly higher recoveries than those extending beyond 600 days. Despite these challenges, the IBC has contributed to a positive shift in India’s credit culture, encouraging early settlements and reducing non-performing assets through pre-IBC resolutions. Additionally, investor confidence has strengthened, as evidenced by a 42% rise in approved resolution plans in fiscal year 2024. A special focus on the manufacturing sector reveals that the IBC has facilitated restructuring and revival, with a 22% increase in resolutions within the sector. However, persistent delays and declining recoveries underscore the need for further reforms to enhance the efficiency of the resolution process. This study provides a comprehensive assessment of the IBC's impact on the Indian economy, offering policy recommendations to improve its implementation. Strengthening institutional capacity, reducing procedural delays, and refining the legal framework are crucial to ensuring that the IBC remains an effective tool for insolvency resolution and financial stability