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Zombie Firms attack

Last week, I stumbled upon a headline that was quite the thriller: "Zombie firms are rising up again in India." Zombie firms? Now, that's a captivating financial conundrum!

Now, these "zombie firms" as businesses that are in deep financial trouble. They can't make enough money from their regular operations to cover their bills, yet they keep going by borrowing money or taking advantage of very low interest rates. No doubt they are called “living dead”. These zombie firms can be found in different parts of the economy and manage to survive because the financial conditions are in their favor. 

Economists and policymakers are raising red flags because these zombies can have detrimental effects on the economy. Also, these zombie companies are a bit like NPCs in a game, they don’t bring anything to the table but take up space. They're not growing, creating new jobs, or innovating. They're just there, using up resources.

The “again” in the article refers to COVID-19 plot twist. These zombie firms were almost gone for good but then found a healthy host when government stepped in to help struggling businesses during COVID and unexpected events like the Ukraine conflict made banks more profitable. So, the attention shifted away from these zombie firms, and the evil returns!!

Now, why did this happen? It's because interest rates on loans are lower right now and tempted some companies to keep borrowing money just to survive. However, they aren't using this money to improve their businesses; they're just using it to stay afloat.

As for the measures taken to address this zombie phenomenon, the article doesn't delve into specifics, but typically, governments and financial experts collaborate to devise strategies for these zombie companies to either recover their financial health or exit the business in an orderly manner, minimizing disruptions to the broader economy.

So, get your popcorn ready because this financial zombie thriller is far from over. We'll be eagerly awaiting how policies and strategies to deal with these corporate zombies develop. 

Feel free to join the discussion, whether in the comments or through direct messages.

(Image by Lucas Varela)


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