Eco Survey: Still no ease of doing business

When India moved up 30 spots in the World Bank’s Ease of Doing Business list last November, many saw it as a celebration of the government’s economic reforms. But the latest Economic Survey, an annual report on the health of the economy, suggests doing business in the country still isn’t that easy.

The 2017/18 survey tabled in parliament on Monday was highly critical of judicial pendency in courts and tribunals across the country which it says is hurting the economy. It suggested a massive revamp of the judicial system as the delays are hampering dispute resolution, discouraging investment, stalling projects, escalating legal costs – and dragging down the economy in general. “Delays and pendency of economic cases are high and mounting in the Supreme Court, high courts, economic tribunals and the tax department, which is taking a severe toll on the economy in terms of stalled projects, mounting legal costs, contested tax revenues, and reduced investment,” says the survey.

The numbers are telling. Arvind Subramanian, chief economic adviser (CEA), said the total backlog in high courts at the end of 2017 was close to 3.5 million cases. Survey data shows 180,000 cases are stuck in six tribunals, up 25% from 2012. “While the volume of economic cases is smaller than other case categories, their average duration of pendency is arguably the worst of most cases, nearly 4.3 years for five major high courts,” he said while releasing the survey.

The government’s infrastructure projects have been hardest hit. In particular, the power, roads, and railways ministries have borne the brunt of the judicial delays. Big-ticket projects like the prime minister’s pet project, GIFT City, is stuck because of paperwork. Similarly, two mega railway projects–Western Dedicated Freight Corridor and Eastern Dedicated Freight Corridor projects–are also stalled. Such delays have led to losses to the tune of Rs 52,000 crore.

One possible reason for the pending cases and delay of economic cases in high courts could simply be that the courts are overloaded. Moreover, economic and commercial cases are usually complex, require economic expertise, and hence, require more judicial time. The survey suggests massive judicial reforms to stop the delays from hurting the economy. “The government and the courts need to both work together for large-scale reforms and incremental improvements to combat a problem that is exacting a large toll from the economy,” says the survey.

The government suggests the judicial capacity of lower courts be expanded to reduce the burden on high courts and the Supreme Court and ensure smooth resolution of commercial disputes. This would require amendments to the Code of Civil Procedure, Commercial Courts Act, and other commercial legislation. Subramanian said courts could consider prioritising stalled cases and impose stricter timelines within which cases with temporary injunctions are decided, especially when they involve government infrastructure projects. “The government may consider incentivising expenditure on court modernisation and digitisation. This needs to be supported with greater provision of resources for both tribunals and courts,” Subramanian said.

Until then, business is likely to continue to grapple with the frustrations of judicial delays in India. And many are going to echo actor Sunny Deol’s iconic tarikh par tarikh line for some time to come.