Economic Survey 2018-19 Calls For Improvement In Contract Enforcement Regime

By Moderator July 5, 2019 13:29

Contract enforcement remains the single biggest constraint to improve India’s Ease of Doing Business (EODB) ranking, which currently stands at 163 in the world ranking, the Economic Survey 2018-19 said.

Key findings

  • Contract enforcement delay single biggest hurdle to ease of doing business, higher GDP growth
  • 5% pending cases in lower courts and this must be the focus of reform
  • 100% clearance rate can be achieved by filling lower, High Court vacancies
  • Simulations of efficiency gains, additional judges needed to clear the backlog in five years
  • Uttar Pradesh, Bihar, Odisha, and West Bengal need special attention

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  • It remarked that in spite of a number of actions to expedite and improve the contract enforcement regime, economic activity was affected by the long shadow of delays and pendency across the legal landscape.
    • It pointed that though laws such as the Insolvency and Bankruptcy Code, passed in 2016, had improved India’s ease of doing business rank in the World Bank’s report, enforcement of business and legal contracts remained a major hurdle.
  • Noting that the relationship between economic governance and the rule of law (Dandaniti) is the key to prosperity, and a bulwark against Matsyanyaya (law of the fish/jungle), the survey said two key issues need to be dealt with in order to make the judiciary more efficient and to clear the ‘legal logjam.’
  • Firstly, the courts must achieve a 100% case clearance rate (CCR) so that there is zero accumulation to the existing tendency.
    • CCR is the ratio of the number of cases disposed of in a given year to the number of cases instituted in that year.
    • a case clearance rate of 100 percent can be achieved by the addition of just 2,279 judges at the lower court and 93 at the high court level, the survey has noted.
  • Secondly, the backlog of cases already presents in the system must be removed.
    • In order to clear all the backlog in the next five years, 8,152 more judges are needed than the sanctioned strength
  • It suggested improving the efficiency of the courts, an increasing number of working days of courts, the establishment of Indian Courts and Tribunal Services, and deployment of technology in the legal system.
  • The survey observed that given the potential economic and social multipliers of a well-functioning legal system, this may well be the best investment India can make.

Also read: Economic Survey On Minimum Wage System

Goods And Service Tax: 2 Years Journey


By Moderator July 5, 2019 13:29