Industrial sickness declines sharply in 06

Chennai, Nov 28 | Updated: Nov 29 2006, 05:30am hrs
First the good news. The menace of industrial sickness that has been plaguing India Inc ever since the liberalization is on the downslide for the past few years. However, the bad news is that the decline in sickness is not due to improved economic efficiency by the firms, but due to consolidation and restructuring in a prey-predator environment, say experts.

According to information gathered by FE, the number of sick firms being referred to the Board for Industrial and Financial Reconstruction (BIFR) has dropped substantially in recent past with the number of cases of sickness reported hitting the nadir in 2006. In 2000, the number of companies referred to BIFR totalled 330, and in 2001, it went up sharply to 463, an increase of over 40%. The number of cases referred to BIFR went up a further 21% to 559 in 2002.

Ever since 2002, the number of companies turning sick as reported by BIFR started declining. In 2003, the number of companies turning sick dipped 23% to 430 and fell further by 7% in 2004 to 399. In 2005, the number of sick companies registered further declined by 55% to 180. Till October 2006, number of companies against which cases were registered by BIFR under the Sick Industrial Companies (Special Provisions) Act, 1985 was just 74. But, experts feel the slowing down in sickness incidence has nothing to do with any dramatic improvement in the efficiency levels of firms.