Explanation:

The Economic Survey 2015-16 identified the Chakravyuha challenge in Indian economy describing the ability to enter but not exit, with seriously adverse consequences. The Indian economy has made great strides in removing barriers to entry for firms, talent, and technology but less progress has been made in relation to exit. Thus, over the course of six decades, the Indian economy has moved from 'socialism with limited entry to "marketism" without exit'.

Impeded exit has substantial fiscal, economic, and political costs.

•    Fiscal Costs: Inefficient firms often require government support in the form of explicit subsidies (for example bailouts) or implicit subsidies (tariffs, loans from state banks).

•    Economic Costs: Misallocation of scarce resources and factors of production in unproductive uses including overhang of stressed assets on corporate and bank balance sheets.

•    Political costs: Government support to "sick" firms can give the impression that government favors large corporates, which politically limits its ability to undertake measures that will benefit the economy but might be seen as further benefitting businesses.