Industrial sickness is one of the most complex problems of the Indian economy. Inspite of the different measures taken by the Government the problem persists. The rise has remained unabated, even in the years after the passage of the Sick Industrial Companies Act (SICA) and the creation of the Board for Industrial and Financial Reconstruction (BIFR). The study reveals that sick units have not only lost their net worth, but they have also lost capital raised from sources other than ownership. The extent of accumulated losses of sick units in India, is about two times that of the net worth of the sick units. The study reveals the failure of the policies in controlling industrial sickness in India, and puts forward certain suggestions to revamp the policy framework so as to effectively tackle the problem.

Industrial sickness is one of the most intriguing, complex, and persisting problems being faced by our economy since long. It was present even in pre-independence days, and the economy in fact inherited this problem from the British colonial rule. After independence, the Government did try to counter the problem. But, the measures taken by the Government to tackle and manage the problem of industrial sickness provided only temporary relief.

In the beginning, the Reserve Bank of India (RBI) was entrusted with the task of monitoring and managing the problem of industrial sickness in the economy. RBI initiated several steps and constituted a study group, known as Tandon Committee, in 1975. Again, in 1976, the RBI constituted a new committee, popularly known as H N Ray committee, to study and suggest measures for mitigating the problem of industrial sickness. Apart from these study groups, nationalization of banks and certain other measures were taken to counter the problem. In the year 1981, a new committee, known as Tiwari Committee, was constituted. The committee was appointed to suggest a comprehensive and a focused measure to counter the problem of industrial sickness in India. The committee was required to suggest special legislation designed to deal with the problem of sickness and revival of sick units. The committee submitted its report to the Government in September 1983 and suggested to pass a special legislation and set-up an exclusive quasi-judicial body to handle the cases of industrial sickness. This recommendation ultimately resulted into passing of the Sick Industrial Companies Act (SICA) in 1985. Soon, in keeping with the recommendation of the Tiwari Committee, an exclusive quasi-judicial body in the name of Board for Industrial and Financial Reconstruction (BIFR) was created. The BIFR started functioning in India in 1987.

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