The Economic Impact of Judicial Delays in India

Source-This post on The Economic Impact of Judicial Delays in India has been created based on the article “Judicial delays: An economic burden” published in “Business Standard” on 6 August 2024.

UPSC Syllabus-GS Paper-2– structure, Organization and Functioning of the Executive and the Judiciary

Context– The Chief Justice of India has highlighted that delays in resolving cases mean denying justice. India’s judicial system is one of the slowest in the world. According to the World Bank, it takes an average of nearly four years to enforce a contract in India, ranking it among the bottom five countries for speed.

What are the reasons behind judicial delay in India?

1) Government Litigation– Government departments, especially revenue and labor, are involved in a large portion of legal disputes. The lengthy duration of these cases has a major overall impact.

2) Government Legal Capacity: – Government legal departments struggle to handle litigation effectively, highlighting the need to build their capacity at both central and state levels.

3) Judicial Vacancy-India has about 25,000 judges, which need to be  increased to two or three times this number to better serve a population of 1.4 billion.

Read More- Reasons Behind Judicial Pendency

What are the Economic Implications of Judicial Delays?

1) Asset Lockup: – Delays in resolving cases tie up assets, land, and resources, preventing their effective use. In India, around $200 billion is stuck in land disputes.

2) Legal Costs- Long delays in cases result in high legal fees and take up a lot of management time, but calculating the exact costs is difficult due to the widespread nature of the problem.

3) Informal Economic Relationships-Due to the difficulty of enforcing contracts, many economic relationships stay informal. This results in increased reliance on personal connections, the continued importance of community networks despite modernization, and small businesses staying in the unorganized sector.

4) Impact on Business Behavior-Unethical practices may become common because delays prevent timely punishment. When enforcing contracts is difficult, businesses become more cautious and focus on short-term goals.

5) Economic Growth- Studies estimate that judicial delays reduce GDP growth by 1-2 percentage points each year, especially affecting industries that are dependent on specific investments and contracts. Modern manufacturing, global trade, and investments depend on timely and fair contract enforcement, which is hampered by these delays.

What should be the way forward?

1) Expansion of Judicial Positions– Increasing the number of judges is important to reducing judicial delays, and this expansion will necessitate investment in new courts, libraries, and administrative staff.

2) Enhancing Infrastructure and Technology– The use of new information technology mechanisms should be enhanced to streamline processes.

3) Administrative Reforms- Frequent rotation of judges and lack of effective grouping of cases can hinder efficiency. Addressing these issues can help speed up case resolution and improve overall judicial efficiency

4) Need for Legal Reforms-Older laws that are outdated or ineffective should be revised or abolished. Practices like frequent adjournments and misalignment of judges’ expertise with case requirements need to be addressed.

5) Coordination Approach- To fix the coordination issues between the judiciary and government, a high-level committee led by a respected former Chief Justice should be established.

Question for practice

What are the economic effects of judicial delays, and what steps should be taken to address them?