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'Delay in enforcing contracts and pendency obstruct high GDP'

New Delhi

04-July-2019

 Delay in enforcement of contracts and resolution of disputes have become the biggest hurdle in the ease of doing business in India, obstructing higher GDP growth, said the Economic Survey 2019, which was tabled in the Parliament on Thursday.

The survey emphasizes unique relationship between economic governance and the rule of law, which is culturally embedded in the history of the civilization. For this, the survey cites ancient thinkers.

Despite this historical connect, the economic activity is being massively affected by the long shadow of delays and pendency across the legal landscape. Although several actions to expedite and improve the contract enforcement regime have been rolled out, these have not improved the legal system.

Contact enforcement continues to remain the biggest problem affecting ease of doing business. The Survey cites a verse from Tulsi's Ramayana, "One's promise is worth more than one's life."

"Delays in contract enforcement and resolution are arguably the single biggest hurdle to the Ease of Doing Business in India.. This is not surprising given the 3.5 crore cases pending in the judicial system. Much of the problem is concentrated in the district and subordinate courts where 87.5 per cent of cases are pending," the Survey states seeking legal reforms.

The Survey says legal reforms should on priority address these pending cases. "A study found out that 100 per cent clearance rate can be achieved by merely filling out vacancies in the lower courts and the high courts (even without productivity gain)", said the survey. The additional number of judges is estimated 2,279 in lower courts and 93 in high courts.

The Survey points out that Uttar Pradesh, Bihar, Odisha and West Bengal need special attention in the appointment of additional judges.

The recommendations for better legal system include: increasing the number of working days, establishment of courts and tribunal services to focus on the administrative aspects of the legal system; and, using technology to improve efficiency of the courts. It cited e-courts mission mode project and the National Judicial Data Grid being rolled out in phases by the Ministry of Law and Justice.

As per the Survey, the required productivity gains, especially at the full strength of judges in district and subordinate courts, is 24.5 per cent, 4.3 per cent in high courts and 18 per cent in the Supreme Court. According to the data, criminal cases top the table in pendency in lower courts. 

The Survey says the scenario analysis of efficiency gains needed to clear the backlog in five years suggest that the required productivity gains are ambitious, but achievable. IANS