Media studies claimed over 10,000 firms in India have been closed in COVID yr. A fact-check

On March 9, a number of information companies reported that 10,113 firms shut their store amid the Covid-19 pandemic. The studies have been based mostly on a solution supplied by the Minister of State for Finance and Corporate Affairs Anurag Thakur in Lok Sabha on March 8, 2021. The studies steered that these firms have been struck off from April 2020 to February 2021. The firms closed down voluntarily and never resulting from any penal motion, companies reported.
During that interval, India had imposed a nationwide lockdown as a result of Covid-19 pandemic. Once the lockdown began to ease in May, a number of states determined to impose restrictions on their very own. The studies in Mint, News 18, Economic Times, Business Standard, and a number of other others tried to attach pandemic and shutting down of firms. However, the truth is much from what had been projected.
Business StandardThe Economic TimesNews 18 EnglishThe HinduMintNews 18 HindiThe query requested in Lok Sabha
On March 8, Member of Parliament Benny Behanan requested [PDF] the Ministry of Corporate Affairs (MCA) to supply particulars of the businesses that went out of enterprise throughout the yr 2020-21 with state-wise knowledge.
Question requested by Benny Behanan and reply by Anurag Thakur on March 8, in Lok SabhaAnurag Thakur knowledgeable in his reply the ministry doesn’t preserve any report of the businesses that had gone out of enterprise. However, a complete of 10,113 firms have been struck off underneath part 248 (2) of the Companies Act, 2013. Thakur added that MCA had not run any drive to strike off firms suo moto throughout 2020-21.
Thakur additionally supplied state-wise particulars of firms struck off throughout the monetary yr 2020-21. A complete of 2394 firms have been struck off in Delhi, whereas in 1936 have been struck off in UP. West Bengal, Andaman and Nicobar Islands have been the one two amongst states and UTs that had a variety of firms closed in single digits.
Number of firms struck down state-wiseWhat does Section 248 (2) of the Companies Act, 2013 say?
According to Section 248 (2) of the Companies Act, 2013, there’s a provision to strike off firms that aren’t carrying on any enterprise or operation for a interval of two instantly previous monetary years and haven’t made any software inside such interval for acquiring the standing of a dormant firm underneath part 455 of the Act. The authorities follows due course of and strike down such firms.
Was the Covid-19 pandemic a big purpose for firms going out of enterprise?
The first notable factor is that the Ministry of Corporate Affairs DOES NOT hold any report of the businesses which have gone out of enterprise. The knowledge supplied by the state minister for Corporate Affairs was based mostly on the information the Ministry had for the businesses that have been struck off throughout the mentioned interval. As per the legislation, the businesses that have been struck off throughout the steered interval weren’t doing any monetary actions for no less than two years. That means the businesses have been non-functional in earlier monetary years as nicely. Covid-19 could be a catalyst in some instances, however the way in which media studies linked the closure of all 10,000+ firms to Covid-19 lockdown is deceptive. Nowhere within the query or the reply Covid-19 pandemic was talked about. Hence, the studies may be deemed as FAKE.