[‘Daily News Updates’ will provide you with a simplified understanding of the important economic/financial events across the country]
24% Recovery from IBC Cases in FY-21
According to a recent research report by Macquarie, out of the total 4,300 odd cases that have been admitted under the Insolvency and Bankruptcy Code, 2016 (‘IBC’), only 8 % have been resolved (through resolution plans), while 40% of the cases are still pending before the court. Thus, liquidation is still the most likely outcome under the Code. “So far 1,277 of the total 4376 companies undergoing insolvency proceedings have been liquidated.” [Liquidation refers to the sale of assets of the company, with the proceeds being distributed among the creditors. Unlike liquidation, in a resolution plan, the company is revived and sustained as a ‘going concern’].
As of March 2021, the recovery rate under the Code stood at 24% (excluding the Top 9 cases referred by the RBI). [This means that, on average, if the debt of a company is Rs. 100, creditors have recovered Rs. 24]. When we include the Top 9 cases, the rate shoots up to 45%. In FY-20, for instance, 1,953 cases were referred to the court involving Rs. 2.32 trillion, of which Rs. 1.05 trillion was recovered.
Another concern is the ever-declining rates of recovery. In the January-March Quarter 2021, even the overall recovery rate was just 26.41%. Further, the average time taken to resolve the cases is 459 days, much higher than the stipulated 330 days. However, one positive from the Code is that many applications (about 17,000) for initiating insolvency proceedings have been resolved even before admission as promoters fear losing control of their company. Besides, the average time taken is much lower than the 4.3 years required before the Code was enacted.
[Also read- The Ultimate Guide to the IBC, 2016]
Government caps prices of major vaccines in India
On Tuesday, the Health Ministry capped the service charge levied by private hospitals (for administering vaccines) at Rs. 150, over and above the prices declared by the manufacturers. Thus, Covishield has been capped at Rs. 780, Covaxin at Rs. 1,410 and Sputnik V at Rs. 1,145. [These prices also include a 5% GST]. This was announced by PM Modi in his address on Monday, but the official notification was released yesterday.
[As of today, 19,21,37,133 people have been given the first dose of the vaccine, while 4,69,21,227 have been administered the second dose as well (i.e., fully vaccinated). By August 2021, the Government had initially planned to vaccinate 30 crore Indians fully. At 4.69 crores currently, it is almost certain that the target will not be achieved].
Active COVID-19 cases fall to 12.31 Lakhs; EoI for 2-DG Medicine
Towards the end of April, we had published an article on India’s oxygen shortage when India’s active cases stood at 28 lakhs. The number of active cases increased further in May when India was reporting over 4 lakh cases daily. In the last 24 hours, India has reported 92,596 COVID-19 cases and 2,219 deaths. Thus, the situation has improved drastically, and we can safely say that the worst of the second wave is behind us now.
Amidst this improvement, the DRDO, which developed the 2-DG (2-Deoxy-D-Glucose), “a drug used for the treatment of COVID-19 patients, has called for Expression of Interest (EoI) to transfer the technology to Indian pharmaceutical industries for production.” The clinical trials of this drug showed that it helps in the faster recovery of hospitalised patients (with moderate to severe infection) and reduces the dependence on supplemental Oxygen. DRDO has also claimed that it can be produced in large quantities.
[How are clinical trials conducted? We had explained this in the context of vaccines earlier-//In Phase-I, a small group of young and healthy volunteers is given varying levels of vaccine doses. This is done to determine the highest level of dosage that can be given without inducing any negative side-effects. In Phase-II, several hundred volunteers are tested to determine further whether an immune response is being generated and if the vaccine is safe. Participants in this stage have similar characteristics compared to the group for which the vaccine is intended. Multiple trials are involved in this phase with different groups and combinations of the vaccine. Finally, in Phase-III, a much larger group (thousands of volunteers) is involved. The volunteers are divided into two groups; while one is given the vaccine, the other is given a placebo. Both the scientists and the volunteers are shielded from knowing whether they have been administered a placebo or the vaccine itself. This is known as blinding. Once the trial is completed, the data is ‘unblinded’ and scrutinised for efficacy//]
Economyria is now on Telegram. For a simplified analysis of topics related to economy/ business/ finance, subscribe to Economyria on Telegram