New Delhi, Jan. 29 -- The effectiveness of the insolvency framework must be enhanced to accelerate recovery timelines that have been stretched beyond their stipulated deadlines, the Economic Survey 2025-26 said on Thursday, highlighting that it would take almost 10 years to clear the current case backlog.

The survey acknowledged that the bankruptcy law has contributed to improved credit discipline, a reduction in bank bad loans and greater predictability in case outcomes.

The pre-packaged insolvency resolution process (PPIRP) for micro, small and medium enterprises (MSMEs) has failed to take off, the survey noted, with only 14 cases admitted in the past four years. The low use of the pre-pack route was due to complex procedures that are...