Introduction
The year 1991 marks a watershed moment in India's economic history. Faced with an unprecedented economic crisis, India embarked on a comprehensive program of economic reforms, fundamentally altering the nature and trajectory of its economy.
These reforms, broadly categorized under Liberalization, Privatization, and Globalization (LPG), aimed to dismantle the complex web of controls and regulations, open up the economy to greater private and foreign participation, and integrate India more closely with the global economy.
While the reforms have been credited with accelerating economic growth and transforming India into a major global player, they have also presented challenges related to inclusivity, sustainability, and sectoral imbalances. The reform process is ongoing, with "second generation" and subsequent reforms seeking to address these challenges and deepen the market-oriented transition.
Background & Causes of 1991 Reforms
The economic reforms of 1991 were not a sudden development but a response to a deepening crisis rooted in macroeconomic imbalances that had been building up over the 1980s.
Balance of Payments (BoP) Crisis
- Forex Reserves Depletion: Plunged to alarmingly low levels (~$1 billion), barely enough for two weeks of imports by June 1991.
- Gulf War (1990-91): Sharp rise in global oil prices, increased import bill, loss of remittances & exports from Gulf.
- Current Account Deficit (CAD): Persistent high CAD, financed by unsustainable external borrowings.
Fiscal Imbalance
- High Fiscal Deficit: Government expenditure consistently exceeded revenue (~8.4% of GDP in 1990-91).
- High Revenue Deficit: Borrowing for consumption rather than investment.
- Mounting Public Debt: Rapid accumulation of internal and external public debt.
High Inflation
- Double-digit inflation (WPI reached 13.9% in Aug 1991), eroding purchasing power.
External Debt Crisis & Credit Rating Downgrade
- External debt nearly doubled between 1985-1991.
- International credit rating agencies downgraded India, making external borrowing difficult and expensive.
- Loss of confidence led to outflow of Non-Resident Indian (NRI) deposits.
IMF Conditionalities
- India approached IMF and World Bank for assistance.
- Loans came with conditionalities under a Structural Adjustment Program (SAP), necessitating significant policy reforms (LPG).
The LPG Reforms: Pillars of Change
The New Economic Policy (NEP) of 1991 comprised a set of measures aimed at stabilizing the economy in the short run and undertaking structural reforms in the medium to long run. The core pillars were Liberalization, Privatization, and Globalization.
Liberalization
Reducing government controls and restrictions on economic activities, allowing greater freedom to private economic agents.
- Delicensing: Abolished industrial licensing for most industries.
- De-reservation: Industries reserved for public sector drastically reduced.
- MRTP Act Abolition: Removed pre-entry restrictions on large industrial houses.
- FIPB: Set up to facilitate foreign investment.
- Banking: Reduction in SLR/CRR, interest rate deregulation, prudential norms, new private/foreign banks.
- Capital Market: SEBI given statutory powers (1992), screen-based trading, dematerialization.
- Tariff Reduction: Peak customs duties progressively reduced from over 300%.
- Dismantling QRs: Quantitative Restrictions on imports largely eliminated.
- Exchange Rate: Rupee devalued (1991), LERMS (1992) towards market-determined rate.
Privatization
Transfer of ownership, management, and control of public sector enterprises (PSEs) to the private sector.
- Improve efficiency & performance.
- Generate resources for government.
- Introduce market discipline.
- Early Phase (1991-99): Minority stake sales.
- Strategic Disinvestment (1999 onwards): Sale of significant shareholding with management control (e.g., BALCO, VSNL, Air India).
- Successes: Revenue generation, improved performance.
- Challenges: Employee opposition, undervaluation concerns, delays, impact on social objectives.
Globalization
Increasing interdependence and integration of national economies through cross-border flows of goods, services, capital, technology, and information.
- FDI Liberalization: More sectors opened, higher caps, automatic route expanded.
- FPI: Allowing Foreign Institutional Investors (now FPIs) to invest in Indian capital markets.
- Trade: Increased volume, diversification of exports/markets. India joined WTO (1995).
Sectoral Impact of Reforms
The impact of reforms has been varied across different sectors of the Indian economy.
Agriculture
Mixed Impact
- Positive: Some export growth, diversification.
- Negative: Reduced public investment, higher input costs, exposure to global competition, agrarian distress.
Industry
Increased Competition
- Growth: In sectors like auto, pharma, consumer durables.
- Challenges: Jobless growth, impact on SMEs, inconsistent manufacturing growth, infrastructure deficits.
Services
Rapid Growth - The Major Beneficiary
- IT/ITES Boom: Global hub, significant GDP/export/employment contribution.
- GDP Contribution: Share increased substantially, becoming dominant sector.
Poverty & Inequality
Divergent Trends
- Poverty Reduction: Official estimates show significant decline.
- Rising Inequality: Income & wealth inequality, rural-urban, regional disparities, jobless growth concerns.
Second Generation Reforms
After the initial wave, "Second Generation Reforms" aimed to deepen the process, address remaining rigidities, and tackle new challenges, focusing on factor markets, institutions, and governance.
Rationale & Scope
- Sustain high growth rates.
- Improve efficiency in factor markets (land, labor).
- Strengthen governance & institutional frameworks.
- Address fiscal prudence & infrastructure.
- Enhance competitiveness.
Key Acts & Policies
Fiscal Responsibility and Budget Management (FRBM) Act, 2003
Aimed at fiscal discipline and long-term macroeconomic stability.
Goods and Services Tax (GST), 2017
Comprehensive indirect tax, 'One Nation, One Tax, One Market'.
Insolvency and Bankruptcy Code (IBC), 2016
Time-bound resolution for corporate insolvency, addressing NPA crisis.
Direct Benefit Transfer (DBT)
Improved targeting of subsidies, reducing leakages.
Jan Dhan-Aadhaar-Mobile (JAM) Trinity
Leveraging digital infrastructure for financial inclusion and targeted delivery.
Recent Reform Initiatives
Labour Codes (2019-2020)
Four codes amalgamating 29 central labor laws. Aim: Simplify laws, facilitate ease of doing business, improve working conditions and social security. (Rules being framed for implementation).
Production Linked Incentive (PLI) Scheme (2020 onwards)
Aim: Boost domestic manufacturing, attract investment, reduce import dependence, enhance exports. Covers 14 sectors. Showing initial success in some sectors like mobile manufacturing.
Farm Laws Repeal (2021)
Three agricultural reform laws enacted in 2020 were repealed following widespread farmer protests. Highlighted challenges in implementing fundamental agrarian reforms.
Achievements & Persistent Challenges
Key Achievements
- Higher Economic Growth: Transitioned from "Hindu rate of growth" to 6-7% annually.
- Strong Forex Reserves: From near depletion to ~$600 billion (early 2024), providing cushion.
- Poverty Reduction: Significant decline in absolute poverty post-reforms.
- Emergence as a Global Economic Player: Increased integration, part of BRICS.
- Diversified Economy: Growth of services, diversified industrial base.
- Improved Consumer Choice: Increased availability and quality of goods/services.
Persistent Challenges
- Sustainability of Growth: Global uncertainties, domestic structural constraints, climate change impact.
- Inclusive Development: "Jobless growth", rising inequality, regional disparities, agricultural stagnation.
- Environmental Concerns: Degradation, pollution, resource pressure, balancing growth with climate commitments.
- Infrastructure Deficit: Gaps in physical (power, transport) and social (health, education) infrastructure.
- Fiscal Consolidation: Maintaining discipline amidst rising demands for spending.
- Governance & Institutional Quality: Corruption, bureaucratic hurdles, slow judicial processes.
Current Affairs Focus
Strategic Disinvestment
Govt.'s continued push (e.g., IDBI Bank, Shipping Corp) faces challenges in valuation, buyers, employee concerns. FY25 target: ₹50,000 crore.
PLI Schemes Performance
Initial success in attracting investment/production; debates on long-term value addition, innovation vs. assembly, fiscal impact. (₹1.03 lakh crore investment, ₹3.2 lakh crore exports).
National Monetisation Pipeline (NMP)
Aims to unlock value in brownfield infra assets. Progress made, but concerns on valuation, contract structuring, service quality post-monetisation.
Conclusion & Way Forward
The economic reforms initiated in 1991 were transformative for India, rescuing it from an acute crisis and setting it on a path of higher economic growth and global integration.
Significance
- Shifted India from a largely state-controlled, inward-looking economy to a more market-oriented, open economy.
- Unleashed entrepreneurial energies and private sector dynamism.
- Positioned India as a significant player in the global economy.
Way Forward
- Focus on Inclusive Growth (jobs, inequality).
- Deepen Factor Market Reforms (land, labor, capital).
- Invest in Human Capital (education, health, skills).
- Strengthen Infrastructure (physical & social).
- Promote Domestic Manufacturing (Make in India, PLI).
- Ensure Environmental Sustainability & Green Growth.
- Enhance Governance and Institutional Capacity.
- Responsive Federalism & Adaptive Policymaking.
The next phase of reforms must be more nuanced, focusing on "ease of living" alongside "ease of doing business," and ensuring that India's growth story is both sustainable and equitable.
Prelims-ready Notes
- BoP Crisis: Forex down to ~2 weeks import cover (June 1991); Gulf War (oil price ↑, remittances ↓).
- Fiscal Imbalance: Fiscal Deficit ~8.4% of GDP (1990-91); High Revenue Deficit; Mounting Public Debt.
- Inflation: Double-digit (WPI ~13.9% Aug 1991).
- External Debt: Soared, credit rating downgraded.
- IMF/World Bank: Approached for loans, leading to Structural Adjustment Program (SAP) conditionalities.
- Liberalization: Industrial delicensing, Financial sector (Narasimham Com.), Trade (Tariff ↓).
- Privatization: Disinvestment of PSEs (minority/strategic sale).
- Globalization: FDI/FPI promotion, WTO membership (1995).
- Agriculture: Mixed; some export growth, but public investment ↓, input costs ↑, distress continues.
- Industry: Increased competition, growth in some sectors, job creation concerns.
- Services: Rapid growth, IT/ITES boom, major GDP contributor.
- Poverty & Inequality: Poverty ↓ (official data), but Inequality ↑ (Oxfam, Piketty).
- Rationale: Deepen reforms, factor markets, governance.
- Key Acts/Schemes: FRBM Act (2003), GST (2017), IBC (2016), DBT, JAM Trinity.
- Recent: Labour Codes (4), Farm Laws (repealed), PLI Scheme (14 sectors).
- Achievements: High growth, Forex reserves ↑ (~$600bn), Poverty ↓, Global player.
- Challenges: Inclusive growth (jobs, inequality, regional disparity), Environment, Agri-distress, Infra deficit.
- Ongoing Focus: PLI Scheme performance, Strategic Disinvestment, Infrastructure Monetization.
Mains-ready Analytical Notes
- Debates: Crisis-driven vs. evolving consensus (Bhagwati vs. Sen).
- Long-term Trends: Tentative reforms in 1980s; 1991 as political opportunity.
- Global Context: Washington Consensus, East Asian economies.
- Liberalization: Pace & sequencing (gradualism vs. big bang); impact on domestic industry; capital account convertibility risks.
- Privatization: Strategic vs. non-strategic PSUs; valuation & process transparency; social equity concerns.
- Globalization: Benefits vs. risks (vulnerability to shocks, race to bottom); balancing offensive/defensive in FTAs (RCEP example).
- Data Example: Trade-to-GDP ratio ↑ (17.2% to >40%); FDI inflows ↑ ($100mn to $70.97bn).
- Agriculture: Pro-reform vs. Critics (neglect of public investment, farmer vulnerability). Growth volatile, share in GDP declined but still employs half workforce.
- Industry: Shift to private sector; "Missing Middle" challenge (SMEs); Make in India & PLI efforts to boost manufacturing share (stagnant 15-17%). Mobile production example.
- Services: Success but employment elasticity for low-skilled labor? Need for diversification.
- Poverty & Inequality: Growth vs. Distribution debate; Kuznets Curve; Rising inequality (World Inequality Report 2022). Poverty reduction significant (NITI Aayog MPI).
- Rationale: Shifting focus from product to factor markets.
- GST: Pros (reduced barriers, formalization) vs. Cons (complexity, compliance burden, revenue issues).
- IBC: Successes (improved recovery, credit culture) vs. Challenges (delays, low recovery, NCLT capacity). Average recovery ~30-35%.
- Labour Codes: Pros (simplicity, flexibility) vs. Cons (worker rights dilution, stalled implementation).
- PLI Scheme: Potential (attract investment) vs. Concerns (low value addition, fiscal burden, protectionism risk). Mobile phone assembly boom vs. local component challenge.
- Historical Trend: Growth higher but volatile, susceptible to global cycles.
- Inclusive Development: HDI rank (134/193) shows gap. MPI shows significant multidimensional poverty reduction (11.28% in 2022-23 from 29.17% in 2013-14).
- Environmental Sustainability: Net Zero by 2070 commitment, renewable energy push (>180 GW).
- Recent Reform Push: National Logistics Policy, PM GatiShakti, Air India sale, Semiconductor Mission.
- Current Affairs Link: Leveraging global supply chain diversification ("China Plus One").
UPSC Previous Year Questions (PYQs)
Test your understanding with past UPSC questions.
Prelims MCQs
Consider the following statements:
- The Standard Mark of Bureau of Indian Standards (BIS) is mandatory for automotive tyres and tubes.
- AGMARK is a quality Certification Mark issued by the Food and Agriculture Organisation (FAO).
Which of the statements given above is/are correct?
- (a) 1 only
- (b) 2 only
- (c) Both 1 and 2
- (d) Neither 1 nor 2
Answer: (a)
Explanation: AGMARK is a certification mark for agricultural products in India, not by FAO. BIS mark is mandatory for several items affecting health and safety, including tyres. This relates to quality standards and consumer protection, an aspect of market reforms.
With reference to the Indian economy after the 1991 economic liberalization, consider the following statements:
- Worker productivity (rupees per worker at 2004-05 prices) increased in urban areas while it decreased in rural areas.
- The percentage share of rural areas in the workforce steadily increased.
- In rural areas, the growth in non-farm economy increased.
- The growth rate in rural employment decreased.
Which of the statements given above is/are correct?
- (a) 1 and 2 only
- (b) 3 and 4 only
- (c) 3 only
- (d) 1, 2 and 4 only
Answer: (b)
Explanation: Post-1991, rural non-farm economy grew (statement 3 is correct). Share of rural workforce in total workforce started declining gradually due to migration and structural shifts, though it's still large (statement 2 is incorrect). Rural employment growth slowed (statement 4 is correct). Worker productivity increased in both, though at different rates (statement 1 is partially incorrect as rural productivity also increased). This question tests understanding of the impact of reforms on labor and structural changes.
Among the following, which one was not a part of the ‘structural adjustment’ programme initiated in 1991?
- (a) Devaluation of the Rupee
- (b) Reduction in import duties
- (c) Privatization of public sector enterprises
- (d) Increase in public sector outlay on infrastructure
Answer: (d)
Explanation: Structural adjustment involved fiscal consolidation, which often meant rationalizing or even reducing public expenditure in the short term, not necessarily increasing it. Devaluation, import duty reduction, and privatization were key components of the 1991 reforms.
Mains Questions
"The New Economic Policy (NEP) of 1991 was a watershed moment in India's economic history, but its benefits have not been evenly distributed across sectors and society." Critically analyze.
Direction:
- Introduction: Briefly state the context of 1991 reforms (crisis, LPG).
- Body Part 1 (Benefits/Achievements): Higher growth, forex, poverty reduction, rise of services, consumer choice, global integration. Mention data.
- Body Part 2 (Uneven Distribution - Critical Analysis):
- Sectoral: Agriculture (stagnation, distress), Industry (jobless growth, SME issues) vs. Services (boom).
- Societal: Rising inequality (income, wealth, regional), job quality concerns, impact on vulnerable sections.
- Conclusion: Acknowledge overall positive shift but emphasize need for inclusive policies, second-generation reforms focusing on equity and sustainability.
How has the era of Liberalization, Privatization and Globalization (LPG) impacted the agricultural sector in India? Discuss the challenges that persist despite three decades of reforms.
Direction:
- Introduction: Briefly introduce LPG reforms and their intended broad impact.
- Body Part 1 (Impact on Agriculture):
- Positive: Export opportunities (horticulture, processed foods), diversification in some areas, access to better inputs (though costly).
- Negative: Reduced public investment, exposure to global price volatility, declining terms of trade for agriculture at times, input market liberalization increasing costs, WTO compulsions.
- Body Part 2 (Persistent Challenges):
- Low productivity, small landholdings, lack of credit access, inadequate irrigation, poor market infrastructure, supply chain inefficiencies, price realization issues for farmers, climate change vulnerability.
- Mention issues like farmer suicides, indebtedness.
- Conclusion: Sum up that agriculture needs a renewed focus with targeted reforms, public investment, and institutional support to make it remunerative and sustainable.
What are ‘Second Generation’ economic reforms? Discuss the rationale and key components of such reforms undertaken in India, highlighting their achievements and shortcomings.
Direction:
- Introduction: Define Second Generation Reforms (deepening first-gen, focus on factor markets, institutions).
- Body Part 1 (Rationale): Need to sustain growth, improve efficiency, address remaining structural issues, enhance competitiveness.
- Body Part 2 (Key Components with Achievements & Shortcomings):
- Fiscal Reforms: FRBM (improved fiscal discipline but escape clauses used), GST (unified market, better compliance vs. complexity, revenue issues).
- Financial/Corporate Sector: IBC (NPA resolution improved vs. delays, low recovery).
- Factor Market (attempted/partial): Labour Codes (aim for flexibility vs. worker rights concerns), Farm Laws (aimed at market freedom vs. farmer opposition leading to repeal).
- Governance/Delivery: DBT (reduced leakages), JAM Trinity (financial inclusion).
- Conclusion: Second-gen reforms are crucial but face complex political economy challenges. Success depends on careful design, consensus building, and effective implementation.
Trend Analysis (Last 10 Years)
Prelims Trends
- Shift from Direct to Applied/Conceptual: Questions focus on impact, structural changes, implications of newer reforms.
- Linkage with Current Affairs: Schemes (PLI), banking reforms (NPA), trade policy (FTAs).
- Analytical MCQs: Require deeper understanding of economic concepts and trends.
- Focus on "Second Generation" & Recent Reforms: More questions on GST, IBC, FRBM, new initiatives.
Mains Trends
- Sustained Focus on Impact Assessment: Critically evaluating LPG impact on growth, sectors, poverty, inequality, employment.
- Sector-Specific Questions: Deep dives into agriculture, manufacturing (Make in India), services.
- Second Generation Reforms - Detailed Analysis: Questions on GST, IBC, FRBM, labor reforms (efficacy, challenges).
- Contemporary Relevance & Policy Linkages: Linking reforms to current challenges and government responses (PLI, NMP).
- Interdisciplinary Linkages: Reforms linked to federalism, governance, social justice.
Current Affairs & Recent Developments
PLI Scheme
Performance analysis, new investments (pharma, food, electronics). Govt. disbursed over ₹4,415 crore under PLI till Oct 2023.
GST
GST Council recommendations on rate rationalization, taxability clarifications, measures to curb evasion.
IBC
Amendments to speed up resolution, discussions on cross-border insolvency framework. (IBBI data on resolution timelines).
Strategic Disinvestment
Updates on specific PSU disinvestments, govt.'s new PSE policy. Budget FY25 target of ₹50,000 crore.
National Monetisation Pipeline
Progress reports, sectors achieving targets (NITI Aayog updates). Aims to unlock value in brownfield infra assets.
Labour Codes
Status of state-level rule framing and implementation. Aim for simplified laws and improved conditions.
Digital Economy
Growth of digital payments (UPI), e-commerce regulations, Digital Personal Data Protection Act, 2023.
Free Trade Agreements (FTAs)
Ongoing negotiations (UK, EU), review of existing FTAs. India-UAE CEPA and India-Australia ECTA operationalized.
RBI's Monetary Policy
Stance on inflation and growth, liquidity management, impact of global interest rate cycles on India's economy.
Original MCQs for Prelims
Which of the following were NOT explicitly part of the initial 'structural adjustment' measures under the 1991 New Economic Policy?
- (a) Significant increase in public expenditure on primary education.
- (b) Abolition of industrial licensing for most industries.
- (c) Reduction in subsidies on fertilizers.
- (d) Introduction of a market-determined exchange rate mechanism.
Answer: (a)
Explanation: While long-term development requires investment in education, significant increase in public expenditure on social sectors was not an immediate focus of the 1991 stabilization and structural adjustment program, which often involved fiscal consolidation. Delicensing, subsidy reduction (fiscal consolidation), and exchange rate reforms were key parts of the 1991 reforms.
Consider the following statements regarding the Production Linked Incentive (PLI) schemes in India:
- The scheme provides incentives only on the total production value, irrespective of whether it is for domestic sales or exports.
- The primary objective is to make Indian manufacturing globally competitive and attract investments in cutting-edge technology.
- The scheme is applicable to all manufacturing sectors without any specific sectoral focus.
Which of the statements given above is/are correct?
- (a) 2 only
- (b) 1 and 2 only
- (c) 2 and 3 only
- (d) 1, 2 and 3
Answer: (a)
Explanation:
- Statement 1 is incorrect: PLI incentives are typically on incremental sales of domestically manufactured goods.
- Statement 2 is correct: Key aims include global competitiveness, export promotion, and attracting investment.
- Statement 3 is incorrect: The PLI scheme is targeted at specific, identified sectors (currently 14), not all manufacturing sectors.
Original Descriptive Questions for Mains
"The economic reforms initiated in 1991, while catalysing growth, have also accentuated the dichotomy between India's 'flourishing' service sector and its 'struggling' agricultural and manufacturing sectors." Do you agree? Substantiate your arguments with recent data and policy examples. What measures are needed for more balanced sectoral growth?
Key Points/Structure for Answering:
- Introduction: Briefly acknowledge the overall positive impact of 1991 reforms on growth. State the premise of the question regarding sectoral imbalance.
- Agreeing with the Premise (Substantiation):
- Services: Discuss rapid growth, contribution to GDP/exports (IT/ITES, telecom, finance). Cite NASSCOM data, Economic Survey data on services share.
- Agriculture: Discuss slower growth, volatility, low productivity, farmer distress. Cite data on agri growth rate, share in employment vs. GDP, recent farmer protests context.
- Manufacturing: Discuss "jobless growth," inconsistent performance, low share in GDP (~17%) despite policies like Make in India. Cite PLFS data on employment, Index of Industrial Production (IIP) trends.
- Nuance/Counter-arguments (if any): Some manufacturing sub-sectors have done well (auto, pharma). Agri-exports have also grown.
- Reasons for Dichotomy: Policy focus, investment patterns, skill availability, nature of global demand, structural issues within agriculture and manufacturing.
- Measures for Balanced Growth:
- Agriculture: Increased public investment, R&D, infrastructure (irrigation, storage, marketing), MSP reforms, promoting agri-processing.
- Manufacturing: Effective implementation of PLI with focus on value addition, skill development, improving ease of doing business further, infrastructure development (logistics), support for MSMEs.
- Inter-sectoral Linkages: Strengthening agri-industry and industry-service linkages.
- Conclusion: Reiterate the need for a holistic approach to ensure that all sectors contribute to and benefit from India's growth story, leading to sustainable and inclusive development.
The Insolvency and Bankruptcy Code (IBC), 2016, has been hailed as a landmark reform. Critically evaluate its performance in resolving corporate distress and improving the credit culture in India. What further amendments or complementary measures are needed to enhance its effectiveness?
Key Points/Structure for Answering:
- Introduction: Briefly introduce IBC, its objectives (time-bound resolution, maximizing asset value, promoting entrepreneurship, improving credit discipline).
- Performance Evaluation (Achievements):
- Improved recovery rates compared to previous regimes (cite IBBI data).
- Shift in debtor-creditor relationship (creditor in control).
- Reduction in NPAs for banks (partially attributable to IBC).
- Promoted a better credit culture, fear of losing control for promoters.
- Examples of successful resolutions (e.g., Essar Steel).
- Performance Evaluation (Shortcomings/Challenges):
- Delays beyond stipulated timelines (e.g., 270/330 days often breached). Cite data on average resolution time.
- Low recovery rates in many cases, significant haircuts for lenders.
- Capacity constraints in NCLT/NCLAT.
- Issues with CoC decision-making, litigation by erstwhile promoters.
- Challenges in resolving real estate insolvencies, protecting homebuyer interests.
- Erosion of asset value during delays.
- Further Amendments/Complementary Measures:
- Strengthening NCLT infrastructure and manpower.
- Pre-packaged insolvency for MSMEs (already introduced, needs wider adoption).
- Cross-border insolvency framework (recommendations of committees).
- Streamlining approval processes, reducing litigation.
- Developing a robust market for distressed assets.
- Better coordination among regulators (RBI, SEBI, IBBI, CCI).
- Conclusion: IBC is a vital reform with positive impacts, but continuous evolution and strengthening of the ecosystem are necessary to realize its full potential in creating a robust insolvency regime.