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Examining the Law and Economics Paradox of India
Law and the Economy in a Young Democracy: India 1947 and Beyond by Tirthankar Roy and Anand V Swamy, University of Chicago Press, 2022; pp 272, $51.75.
From a law and economics point of view, India stands out as a unique case. It has a legal system that is sophisticated and yet very cumbersome. The legal system is complex to the extent that there is wide agreement with the view that it is difficult to do business
in India. According to Prime Minister Narendra Modi, by the end of 2022, the government had scrapped around 2,000 laws from the British era that required industrialists to be sent to jail over minor issues. Yet, much more remains to be done. According to informal estimates, business activities in India must still wade through several thousands of rules and regulations.
Yet, the economy has grown at a reasonably high rate, especially since the economic reforms of the 1990s. India has come to be the fifth largest economy in the world. Still, its aim to get ranked in the top 50 in terms of ease of doing business is considered to be ambitious by many. On the face of it, this mix of a fast-growing economy and a very slow legal system goes against the conventional wisdom that sustained growth over the long run requires a well-developed legal infrastructure for conducting business, including cheap and reliable contract enforcement and secure property rights.
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