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Justice delayed is markets stymied

Since the 1991 economic reforms, India has improved tremendously in almost all economic indicators, and is now one of the fastest growing nations in the world. Various economic policies of the current government have enabled the economy to move faster than ever before. These include tax reforms leading to the introduction of the Goods and Services Tax, reforms making India more competitive in the ‘Ease of Doing Business’ index, and implementation of the Insolvency and Bankruptcy Code. But it has never been more important to also strengthen the quality of the material which makes up the engine of the economy, i.e. India’s institutions. As a democracy, India has an advantage: the roots of all its institutions are strong. However, they have simply failed to grow with the growing population and with increasing demands. The judicial system, in particular, is far from reaching the pace required for efficient functioning. An inefficient judiciary The importance of the judiciary cannot be underplayed in a market economy. Three things are crucial for the market economy to function efficiently: transparency in information, efficient dispute settlements, and contract enforcement in a time-bound manner powered by an effective judiciary. In a market economy, the government has little role to play in transactions among players. However, it plays an effective role by setting up efficient dispute settlement mechanisms, so that the costs of transactions are minimal. In such an economy, the judiciary plays the pivotal role by enforcing contracts in the case of disputes through minimal costs. Over the years, and with the advent of the Internet, India has taken a leap towards transparency of information. However, little progress has been made in the case of dispute settlement mechanisms due to an inefficient judiciary. The situation is so desperate that the Economic Survey of 2017-18 had to set aside an entire chapter on the need for ‘Timely Justice’. It noted that the current working capacity of the High Courts and the Supreme Court is only 63.6%. Plus, there are huge numbers of pending cases: 1.8 lakh in six of the major tribunals, and close to 3.5 million in the High Courts. For economic cases, the average duration of pendency is about 4.3 years for the five major High Courts. The Centre and the States approximately spend 0.08-0.09% of the GDP on administration of justice, which is very low. In 2017, India spent about Rs. 0.24 per person on the judiciary; the U.S. spent Rs. 12. Even though, understandably, it is a little punitive to compare India’s budget with that of the most powerful economy in the world, the point is to set out a benchmark for India.

Source : https://www.thehindu.com/todays-paper/tp-opinion/justice-delayed-is-markets-stymied/article26055980.ece

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