A British High Court last week issued an enforcement order in favour of 13 Indian banks against fugitive Vijay Mallya, permitting an Enforcement Officer to enter his property.

Compare that to the fate of victims of Ponzi scheme frauds in India where courts favour the wrongdoers and punish the victims, by endlessly, and unnecessarily, granting adjournments. The judiciary may not have heard the oft repeated saying ‘justice delayed is justice denied’ or, worse, perhaps don’t care.

This is something that the government and the judiciary should urgently tackle. Instead, both are caught up in an ego trip of their own doing, showing poor maturity, abysmal governance and a wanton disregard of the imperative to dispense swift justice.

Until such time as we get up to speed and are able to swiftly dispense justice, the economic potential of India cannot be fully tapped.

Not that it cannot be done.

In arbitration matters, a clear timetable is determined at the commencement of proceedings. The arbitrator (judge) asks each side how many hours they would require for arguments, sees his calendar and allots the time, and completes the arbitration in a time-bound manner. One, at most two, adjournments are permitted to each side (as in Wimbledon challenges). This framework exists. Why can it not be followed by the courts?

At the recent AIIB AGM, acting Finance Minister Piyush Goyal stated that India needs to invest $4.5 trillion in infrastructure over the next decade (three times the earlier target of $1.5 trillion) but that getting this amount of capital was difficult.

Assocham’s initiative

ASSOCHAM is raising awareness of the need to promote a debt market in India. Globally, debt, or fixed income, markets, are larger than equity markets, but have been neglected in India. Infrastructure companies tend to borrow money from commercial banks, which are not institutions suited for the purpose.

In days of yore long-term institutions (IDBI, IFCI, ICICI together with LIC, UTI and GIC) used to raise long-term funds and lend them on a long-term basis for projects. The first three have become commercial banks and there are no term lending institutions left. A mistake.

Commercial banks borrow at most for five years through fixed deposits. But they lend for 15-30 years in infra projects. This poses a risk. The interest rates at which the bank borrowed earlier, and on which basis they lent, might go up in the interim. A bond market is thus, necessary. Assocham has held some 13 conferences to promote the development of a bond market.

But again, to attract investors into bond markets, or investors into infra building or funding infrastructure projects, we need a judicial system that swiftly resolves disputes.

Thwarted by lethargy

One fails to understand how a government, priding itself for good governance, can take its own time to resolve this matter, jointly with the judiciary. It is of national importance. Without the huge investment of $4.5 trillion only in infrastructure (more in other areas) will 1. We be able to provide enough jobs?; 2. We be able to grow GDP at over 7.5 per cent p.a.?; 3. We be able to raise our standard of living and graduate to the status of a developed economy?

India’s compelling story is thwarted by the lethargy of its judicial system and it is an urgent reform sorely needed if the economy, and the stock market, is to grow.

(The writer is India Head — Finance Asia/Haymarket. The views are personal.)