Q.Explain the causes of industrial sickness in India and suggest remedial measures.

Industrial sickness arises from internal causes (poor planning, mismanagement, obsolete technology) and external causes (weak demand, input constraints, import competition), and is addressed through timely revival support and time-bound resolution.

An industrial unit is considered sick when it has incurred continuous cash losses over a defined period and suffered significant erosion of its net worth, leaving it unable to meet its obligations from its own resources. Industrial sickness has affected units across both the public and private sectors and is generally traced to a combination of internal and external causes.

Internal causes include poor project planning and appraisal at the outset (leading to wrong technology choices, wrong location, or an unrealistic scale of operation), inefficient and sometimes politically influenced management, inadequate working capital and undercapitalisation, obsolete plant and machinery that raises costs and lowers quality, and poor labour relations that disrupt production. External causes include inadequate market demand for the unit's output, difficulty in securing raw materials or power at reasonable and reliable terms, increased competition — including from imports after trade liberalisation — and, at times, restrictive or slow-moving government policy and regulation.

Remedial measures operate at two levels. At the level of an individual unit, timely diagnosis of financial stress, restructuring of debt, infusion of fresh working capital, technological modernisation, and change of management where required can revive a genuinely viable unit; where a unit is not viable, an orderly, time-bound resolution or liquidation — now conducted under the Insolvency and Bankruptcy Code, 2016 — prevents scarce capital from remaining locked in a non-productive enterprise indefinitely. At the level of policy, the government has pursued measures such as improving the ease of doing business, providing targeted credit support to MSMEs (which are especially vulnerable to sickness), investing in infrastructure to lower operating costs across industry, and offering incentives such as Production Linked Incentive (PLI) schemes to encourage modernisation and competitiveness, all aimed at reducing the incidence of sickness before it sets in rather than only managing it after the fact.

Answers frequently list causes but skip remedial measures, or discuss remedies only in general terms without distinguishing unit-level revival action from broader government policy, both of which examiners look for in a full-length essay answer.