Enforcement of contract is one of the key areas towards further increasing ease of doing business in India. What are the key loopholes in current contract law to be plugged? Discuss

India stands in 100th place in 2017 Ease of Doing business report released by World Bank by jumping 30 places from 130 in the previous year. India still lags in areas such as starting a business, enforcing contracts and dealing with construction permits. Among these, India lagged far in enforcement of contract. The World Bank’s rankings on contract enforcement assess the time taken to resolve a dispute, the cost—court fee and lawyers’ fee, and the quality of the judicial process in the country, including court structure and proceedings, case management, court automation and alternative dispute resolution. India ranks a poor 164th among 190 countries on enforcing contracts
Some of the key loopholes in current contract law in India are

  • It takes longer nearly 1,445 days, to enforce a contract in India.
  • In India it is more expensive to resolve disputes than in other south Asian countries. For example, a high 31% of the claim value goes in meeting costs in India against 9% for Singapore in resolving disputes.

To improve India’s rank in enforcement of contract government is taking steps like establishing commercial courts will hear cases involving disputes of under Rs 1 crore, directing cases to alternative mechanisms of dispute resolution, expediting the e-courts project to enable e-filing of complaints etc.

Question for UPSC Mains:
Enforcement of contract is one of the key areas towards further increasing ease of doing business in India. What are the key loopholes in current contract law to be plugged? Discuss

Published: December 10, 2017 | Modified:June 27, 2019

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