IDAW Session on Rule of Law and Economic Growth
The Friday session of the Indian Democracy at Work Conference 2021 on Rule of Law saw an eminent panel deliberate on Rule of Law on Economic Growth. Shri R.N. Bhaskar, Senior Business Journalist was the chair for the session. Dr. Montek Singh Ahluwalia, Former Deputy Chairman, Planning Commission of India, Dr. Arvind Virmani, Chairman, Foundation for Economic Growth and Welfare, Shri Pradeep S. Mehta, Founder Secretary General, Consumer Unity & Trust Society and Dr. Jayaprakash Narayan, Retd. IAS and founder of Foundation for Democratic Reforms.
Shri R.N. Bhaskar started the explaining the importance and urgency of Rule of Law. He started with showing statistics how at all levels from Judges to police personnel are always short in numbers. This repeated shortage is not an accident but by design. This needs urgent attention.
Evidence cannot live beyond a fortnight is a good attitude for the justice system to have to quickly provide justice. In ancient Rome lawyers were remunerated on swift conduct of trial and speed justice. Lack of adequate judicial system leads to organized crime filling the void and eventually leading to anarchy. Small protection pockets are created when a section of people come together and being legal becomes unimportant. When people have to vote for their protectors and no other criteria is used to vote a corrupt and criminal system develops. The weakness in the system not to punish the corrupt is very detrimental. There are also lot of issues of MSME, India’s backbone, that need immediate attention.
Dr. Montek Singh said no worthwhile economic growth can take place without rule of law. Our legal system is dysfunctional, laws are not well drafted and remedies lie in several different areas. We currently, do not have enough judges and policemen and state cannot have be expected to provide justice to its citizens with such shortages. He added that we also need high quality of lawyers and judges. It sometimes feels that we are expecting reforms in the country from judiciary and judgements. On another front, government negating of licenses after granting them, leads destroying confidence in the investors and leads to larger uncertainty. In addition, uncertainty of land titles leads investors to expect the government to acquire land for them. This creates an uneasy relationship between the government and the business. On the long run no matter what decision you make it seems it can be controversial, but still we must deliberate and decide what is right. He further added that raising the level of deliberations by including all segments of economy with transparency and hearing out to comments go a long way.
Dr. Arving Virmani stated that economics and law are essential concepts to understand for all of us. Markets and role of governments are critical subjects and evidence of history is pointing to the answers. Since ancient times, there have been rules and laws and there were always some kind of support system to conduct trade. He added that regulations are in a grey area and that there are positive and negative externalities in modern economy. Three sectors namely Financial Sector, Education Sector, and Health Sector are full of information asymmetry. Similarly the modern economic activities seem to have lot of asymmetric information issues and moral hazards and so need modern and professional regulators to tackle the issues with vigour.
Shri. Pradeep S Mehta said that seeking adjournments in courts and lack of appropriate court management system is dampening the economic activity. He also added that colonial system of holidays in court is inappropriate. This also increases the time for judges to pronounce judgements. We need to improve on the quality of Judges and increase the number of judges. Shri Mehta insisted that lok adalats and gram nyayalayas for quick justice at the village and local level will instill confidence in the society and economy. Contract enforcement is one of the worst in our and on this front government cannot do much, but judiciary has to step up. For modern economy, we require reorientation of judiciary with cognizance on economic impacts. We should focus on constitutionality and institutions and that a few PILs cannot reform the whole system. Building institutions is necessary, rather than few individual pockets dispensing justice like police personnel acting as arbitrators and adjudications or local strongmen settling disputes.
Dr. Jayaprakash Narayan: Supreme Court is meant for determining constitutionality of laws, not for assessing merits or demerits of a policy or making better policy. He added that public opinion has not yet completely accepted clear separation of powers. FDR and Loksatta constituted a committee of eminent jurist-Justices Venkatachaliah, JS Verma and Krishna Iyer - to recommend a model for judicial appointments, and persuaded the main parties to create NJAC. But the Supreme Court quashed the 99th Amendment. As people are not ready to insist on separation of powers, it will take long to correct the distortion of judges appointing their successors. Finally FDR pursued the local courts law and Gram Nyayalayas Act has been enacted in 2009. But so far only over 200 courts are functioning whereas about 6000 courts should have been in place. Most simple cases can be decided by local courts swiftly through summary procedures, and reduce the burden on judiciary. Courts playing their rightful role, improving procedures, strengthing capacity and expertise, and injecting talent through IJS and other measures are needed immediately.