Contract enforcement remains the single biggest hurdle to improve India's ease of doing business ranking, according to the Economic Survey 2018-19 report tabled in Parliament on Thursday by finance minister Nirmala Sitharaman.

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The report notes that the solution is to improve the judicial system, particularly in lower courts where 3.5 crore cases remain pending.

“Delays in contract enforcement and disposal resolution are arguably now the single biggest hurdle to the ease of doing business in India”, says the Survey in its chapter titled Ending Matsyanyaya: How To Ramp Up Capacity In The Lower Judiciary.

“This is not surprising given the 3.5 crore cases pending in the judicial system. Much of the problem is concentrated in the district and subordinate courts where 87.5 percent of cases are pending,” it adds.

India climbed to 77th position in the World Bank's ease of doing business ranking that captured the performance of 190 countries late last year.

The Ease of Doing Business assessment provides objective measures of business regulations and their enforcement across 190 economies on ten parameters affecting a business through its life cycle.

Among various indicators, India's worse performance was highlighted in enforcing contracts, where the country ranked 163rd in 2018.

The overall improvement in the country's rank came largely on the back of four key indicators of construction permits, trading across borders, getting credit and getting electricity. Starting a business and enforcing contracts still remains two big hurdles.

The Survey also points out that Uttar Pradesh, Bihar, Odisha and West Bengal need special attention, given their lower clearance rates. The Survey suggests that these states should be given priority in the appointment of additional judges.

For enhancing productivity in the judiciary, the Survey suggests an increase in the number of working days, establishment of courts and tribunal services to focus on the administrative aspects of the legal system, deployment of technology to improve efficiency of the courts, like the e-Courts Mission Mode Project and the National Judicial Data Grid being rolled-out in phases by the ministry of law and justice.

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