The legal bottleneck in the country with its massive backlog of cases, is a key issue that is detracting from the ease of doing business and discouraging foreign investors from investing in India, the Economic Survey said today. The backlog of cases, not just at the courts but economic tribunals and the tax department, is constraining economic growth.
"In spite of a number of actions to expedite and improve the contract enforcement regime, economic activity is being affected by the long shadow of delays and pendency across the legal landscape," said the survey, presented earlier today by Chief Economic Advisor K Subramanian.
Last year, India jumped 23 spots to rank 77th in the Ease of Doing Business index. While the biggest gain was in construction permit, the country lagged when it came to enforcement of contract.
"India, the survey report said, continues to lag on the indicator for enforcing contracts, climbing only one rank from 164 to 163 in the latest report of EODB (Ease of Doing business), 2018. Contract enforcement remains the single biggest constraint to improve our EODB ranking," it added.
The solution, the survey said, was to appoint more judges.
"A case clearance rate of 100 per cent (i.e. zero accumulation) can be achieved with the addition of merely 2,279 judges in the lower courts and 93 in High Courts even without efficiency gains. This is already within sanctioned strength and only needs filling vacancies," said the survey.
In 2018, the country's Case Clearance Rate -- the ratio of number of cases completed to those filed in a year - stood at 88.7%. But states like Madhya Pradesh, Assam and Tamil Nadu had a case clearance ratio of nearly 100 per cent. In states like Bihar, Odisha and West Bengal, the rate was between 55% and 78%.