Building Legal and Judicial Capacity For India’s Economic Momentum

Syllabus: GS2/Polity; Judiciary

Context

• As India ascends to become the world’s fourth-largest economy, strengthening the judiciary is a prerequisite for sustaining India’s economic momentum.

Why Legal Capacity Matters for India’s Growth?

• The judiciary needs to evolve to handle increasingly complex economic and regulatory matters, as India’s GDP crosses $4.18 trillion and is projected to reach $7.3 trillion by 2030.
• It underscores the nation’s growing aspirations to play a leading global role, making legal and judicial capacity building a central pillar of India’s economic governance strategy.

From 1991 Reforms to 21st Century Challenges

• Economic Reforms (1991): India’s economy transitioned from a state-controlled system to a market-driven economy, followed by exponential growth inprivate enterprise, foreign investment, and infrastructure expansion, giving rise to complex corporate and commercial legal issues.
  • Indian courts primarily handled civil, criminal, and family disputes before liberalization.
  • Today, they face FDI-related conflicts, corporate restructuring cases, financial sector disputes, and emerging digital economy challenges. 
• It demands a judiciary to be efficient and commercially literate and technologically equipped.

Current State of India’s Judiciary

• Pendency Problem: Currently, 4.8 crore cases are pending across all levels of the judiciary, with government entities involved in nearly half of them.
  • Of these, over one crore civil cases remain unresolved, with 57% pending for more than a year.
  • The Supreme Court alone has over 89,000 pending cases, with some dating back to the 1980s.
• Severe Judge Shortage: India has only one judge in the High Court for every 1.87 million people.
  • Over 33% of sanctioned posts in High Courts remain vacant, contributing to a 20% rise in case pendency over four years.
• Infrastructure Gaps: Commercial litigation, including Insolvency and Bankruptcy Code (IBC) cases, has surged sharply, as the NCLT alone reported 14,961 pending cases as of March 31, 2025.
  • But, India’s judicial infrastructure continues to operate on a 20th-century model, ill-equipped to handle 21st-century commercial realities.
• Low Enforcing Contracts: India’s rank of 163rd in enforcing contracts remains a major concern, despite progress in the Ease of Doing Business rankings (63rd in 2020 from 142nd in 2014).
  • It currently takes nearly 1,500 days on average to resolve a standard commercial dispute in a court of first instance.
  • According to the World Bank, delays in judicial efficiency directly affect time, cost, and the quality of judicial processes, undermining investor confidence and economic momentum.

Pillars For Building Judicial Competence

• Corporate Governance and Company Law: Judges need to be trained in board structures, fiduciary duties, shareholder agreements, and emerging domains like ESG and digital governance.
  • Judicial academies should collaborate with academics, law firms, and regulators to design advanced corporate law curricula.
• Commercial Contracts and Complex Transactions: Judges require training on PPP models, project finance, and cross-border contract disputes as infrastructure and M&A cases proliferate.
  • The Dubai International Financial Centre (DIFC) offers a global model through its joint judicial and financial training initiatives.
• Financial, Banking, Insurance, and Insolvency Law: A deep understanding of restructuring principles, valuation methods, and economic analysis is essential.
  • The US Bankruptcy Courts exemplify it through their specialized annual judicial education programmes led by the Federal Judicial Centre.
• Competition Law and Market Economics: Judges need to grasp concepts like market definition, dominance, and economic evidence.
  • The European Judicial Training Network provides a precedent by equipping EU judges with industrial economics training.
• Technology, Digital Economy, and Data Governance: Judges need to be prepared to handle algorithmic accountability and AI-in-contract law, with AI, fintech, and data governance shaping legal landscapes.
  • Countries such as Singapore and Estonia have introduced structured training for technology-related adjudication.

Conclusion

• The Chief Justice of India (CJI) has identified reducing pendency as a core institutional goal, and achieving it requires a systemic reimagination, one that integrates judicial education, technological modernization, and commercial law literacy into the fabric of India’s legal ecosystem.
• Judicial capacity building aims to support the system and cornerstone of sustainable economic governance as India moves toward its $7.3 trillion economic target.

Source: BL