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Thursday, March 21, 2024

Rethinking innovation policy in India: amplifying spillovers through contracting-out

by R. A. Mashelkar, Ajay Shah, Susan Thomas.

Independent India valued science and rationalism at an early stage of social and economic development. The objectives of building the scientific temper and harnessing the power of science and technology were clearly articulated, for example, in the 1958 Science Policy Resolution. These objectives pertain to improvements in the people, in the society. 

The practical aspects of government expenditures on innovation, and the construction of organisations doing frontiers work, emphasised government organisations. The government used taxpayer resources, built science organisations, hired scientists as civil servants, and developed capabilities within these organisations

In a new paper, Rethinking innovation policy in India: amplifying spillovers through contracting-out, we reopen the objectives of innovation policy in India, applying modern knowledge of public economics and public administration to obtain fresh insights.

We start at the foundations of innovation policy, with new clarity on the questions of why (what motivates state intervention in innovation?), what (in what areas should government intervention into innovation take place in India?), how (what mechanisms should be used when spending public money?) and how much (at what point do the incremental gains to society equal the incremental costs).

The market failure that motivates this field is the problem of spillovers, where the full gains from innovative activity by one person are not captured by her, leading to systematic under-investment into innovation by her. There is a case for public expenditure, where taxpayer resources are spent on innovation, but the expenditure needs to be done in a way that induces spillovers into the society.

We undertake four detailed case studies: the US National Aeronautics and Space Administration (NASA), the US National Institutes of Health (NIH), innovation policy in French defence procurement and CSIR's New Millennium Indian Technology Leadership Initiative (NMITLI). In each case, we understand how tradeoffs are made between `make' and `buy'. Make involves building state organisations, scientists as civil servants. Buy involves contracting-out innovative activities into the society, to private firms and particularly to high-spillover sites of universities and research organisations (whether public or private).

While doing more contracting-out is appealing from the first principles of innovation policy -- the purpose is to obtain greater capabilities in the society, not in the state -- there are many difficulties in implementation. We suggest the strategy for implementation which involves (a) Changes to the GFR; (b) Changes to the founding documents of government innovation organisations; (c) Changes to procurement rules and internal process manuals; (d) Resource planning for a gentle reform trajectory; and (e) a sketch of the required project planning.

Many elements of innovation policy in India have been moving in a similar direction. Three recent initiatives should be pointed out. The Union Interim Budget of 2024-25 envisages a Rs.1 trillion fund that would be channeled to research and innovation in the private sector. The `National Research Foundation' has been setup with a law that came to force on 5 February 2024. The K. Vijay Raghavan Committee report, submitted in early January 2024, has important ideas on improving the working of DRDO. There is a harmony between the philosophy of these three moves, and the ideas of this paper. Conversely, the detailed work of this paper can be useful in translating these initiatives from concept to implementation.


R. A. Mashelkar, FRS, was Director General of CSIR. Ajay Shah and Susan Thomas are co-founders of XKDR Forum.

Monday, February 26, 2024

The electricity chokepoint in Tamil Nadu public finance

Charmi Mehta, Radhika Pandey, Renuka Sane and Ajay Shah

Each state in India can be visualised as an entity in itself. Vast magnitudes of finance will be needed to put the states on an energy transition pathway. While this pathway will be different for every state, the electricity sector is likely to be the recipient of much of these funds. The investibility of the electricity sector is thus an important field of study.

Many states in India face fiscal distress and many states in India have difficulties in the electricity system. In a new paper, 'The electricity chokepoint in Tamil Nadu public finance', we bring the two streams of knowledge together for the state of Tamil Nadu, and offer fresh insights for fiscal policy and for electricity policy.

The formal toolkit of a `debt sustainability analysis' (DSA) is brought to the standard Tamil Nadu fiscal data. This involves a first stage of comparing a group of fiscal indicators against normative benchmarks, and a second stage of forecasting the debt/GSDP ratio and the interest payments to revenue receipts ratio (IP/RR ratio) for five years; till FY 2028. These results, which we term the `baseline DSA' translate the mainstream intuition towards Tamil Nadu's fiscal difficulties into tangible numbers and forecasts.

A consolidated financial picture is drawn by integrating the two electricity sector utilities -- TANGEDCO and TANTRANSCO -- fused into the Government of Tamil Nadu debt stock. This yields a modified DSA that we term a `Corrected DSA'. This is done to acknowledge the implicit guarantee that state governments hold towards the debt of state-owned entities. This modified picture is thus a truer depiction of the fiscal problems of the state.

The fact that large debt servicing expenditures were successfully achieved for the last decade has helped create a confidence that the fiscal strategy of Tamil Nadu is deplorable but feasible. Of essence in the fiscal outlook of every highly indebted entity is the problem of sustainability. There are three concerns:

  1. Sustained large scale borrowing, from the financial system, may potentially face difficulties through the risk appetite of lenders, changes in regulations, systemic crises in the financial system, etc.
  2. The most important assumptions that shape the results of this paper are the nominal interest rate ($r$), estimated at 7%, and nominal GSDP growth rate ($g$), estimated at 9%. This has a $r-g$ of -2: it is a very positive environment from the viewpoint of fundamental fiscal dynamics. In the future, if $r-g$ becomes less benign, the debt dynamics could change significantly.
  3. The conventional notion of fiscal stress is phrased in terms of bond default. In India, fiscal distress is known to manifest itself as unplanned budget cuts (that disrupt the working of the government), defaults on payments to private firms, and even the deferrals salaries or pensions. We look back upon three instances when state governments faced high fiscal stress in 2001, and find that the present projections for Tamil Nadu for FY 2028 are partially similar to these values.

The fiscal knowledge of this paper has implications for electricity policy. The electricity system requires two large blocks of investment. A big block of capital is required to rebuild the grid for the post-carbon world. And, a big block of capital is required for the investment in renewables and storage that are required to sustain economic growth in the post-carbon world. Of particular importance is the economic upside from exploiting that remarkable natural resource which is found off the coast of Tamil Nadu in the form of offshore wind generation. These investments will not arise in the environment of chronic fiscal stress in the electricity system.

The electricity knowledge of this paper has implications for fiscal policy. Through simulations where electricity subsidies remain constant or they are completely eliminated, we find that the electricity system is material in solving the fiscal problem. Thus, we extract the electricity subsidy problem from the sector, and place upfront its impact on the public finance parameters and the development trajectory of the state. A complete electricity sector reform versus business-as-usual translates into an FY 2028 outcome for the debt/GSDP ratio of 32.47% vs. 43.53%, and an IP/RR ratio outcome of 19.71% vs. 26.12%. These are large differences. They encourage us to prioritise electricity sector reform as a part of the medium-term fiscal strategy.


Charmi Mehta and Ajay Shah are researchers at XKDR Forum. Radhika Pandey is a researcher at NIPFP. Renuka Sane is a researcher at Trustbridge.

Saturday, February 24, 2024

The consequences of criminalising cheque bouncing

by Shubho Roy and Ajay Shah

Many countries (e.g. New Zealand, Poland, Germany, Norway) have discontinued paper cheques. In other countries (e.g. the U.K., the U.S.), the use of cheques is declining. But in India, the use of paper cheques in India has stabilised in terms of value and number over the last five years. This is despite the extent to which digital and instantaneous payments are now feasible. Why might this be the case?

Prior to 1988, cheques were primarily used as a tool of payment. In that age, there were delays in clearing. Paper cheques had to be transported to the bank branch where the cheque issuer had an account. In that branch, the issuer's signature would be verified against a sample. If the signatures matched, the balance would be cleared (assuming the issuer had adequate funds). This process took seven working days, even when the issuer and recipient had banks in the same city. If the parties were in different cities, the process would take 15 working days, on average.

Today, a cheque issuer can send a secure document showing that the issuer's bank account has adequate funds to honour the cheque. However, in 1988, there was no such system, and the cheque recipient faced the risk that the issuer was writing a cheque that her account could not honour.

Some technical mistakes can always happen, where a person fails to anticipate the date on which funds are required and there are unpredictable delays in the money moving in and out of the account. Alongside this, many unscrupulous people knowingly wrote bad cheques. This made sellers mistrust cheques and prefer cash. While cash as a payment mechanism has the virtues of instantaneity and privacy, it comes with difficulties on physical security.

The 1988 change of the law

In this setting, the Parliament criminalised the bouncing of cheques in 1988. Now, the cheque writer could be sent to jail if the cheque did not clear. The law also stated that every cheque is presumed to be written to clear a debt. This change helped the recipient of cheques because the recipients did not have to prove any underlying transaction. The recipient only had to demonstrate that the cheque was not honoured.

In 2016, the Supreme Court ratified the practice of using cheques as collateral in the case of Sampelly Satyanarayana Rao v Indian Renewable Energy Development Agency Limited. Sampelly Satyanarana Rao (Mr. Rao) had written post-dated cheques as security for a loan from the Indian Renewable Energy Development Agency (IREDA). Mr. Rao did not take the loan personally but wrote the cheques as a director in the company that borrowed the money. The borrower company failed to pay the instalments when they became due. In response, IREDA (the creditor) initiated criminal proceedings against Mr. Rao under the 1988 law. Mr. Rao defended the claim by stating that the cheques were written before the creditor (IRDEA) disbursed the loan amount. IREDA pointed out that the cheques were deposited after the borrower (the company) had failed to pay the instalments, and therefore, the penal provisions of the 1988 Act applied. The Supreme Court agreed with the creditor and allowed for the criminal prosecution of Mr. Rao. This judgement provides legal certainty to the use of post-dated cheques as security. This date, i.e. 2016, is an important milestone in the journey, over and beyond the amendment of the N. I. Act in 1988.

The role of cheques in India today

The threat of imprisonment restored some faith in cheques. Anecdotally, it seems to have worked well in the initial years after the amendment. Cheques became more acceptable in commercial transactions and helped reduce frictions in economic activity. Many a cheque recipient was willing to take the risk of delivering goods without waiting one or two weeks for a cheque to clear.

These considerations do not exist in the present landscape. Instantaneous payment systems are ubiquitous in India, ranging from small value payments to the largest amounts possible. Any problem of trust between buyers and sellers can be readily solved by resorting to NEFT or RTGS. By this reasoning, the number of cheques written in India should have declined sharply. It has not.

People responded to incentives

Alongide this, the rest of the Indian legal system which enforces contracts works poorly. Ordinarily, a loan dispute would be resolved as a contract dispute through civil law, and, in some cases, bankruptcy law may be involved in situations where the debtor is insolvent. In 2020, in enforcing contracts, India ranked 163 out of 190 countries, while its overall rank was 63 (a difference of 100 ranks). India's rank in resolving insolvency was 52. Hence, creditors are unconfident about ordinary credit enforcement mechanisms.

One strand of credit enforcement systems is seizing assets that are pledged as collateral. This tends to work poorly in India. While the SARFAESI Act of 2002 is reasonably effective in getting collateral into the hands of the lender, many assets are hard to sell. Many land titles have encumbrances, and the land market works poorly, which hinders the recovery rate.

These weaknesses of the ordinary (civil) credit enforcement systems made criminal proceedings under S.138 attractive to creditors. Under S.138, a debtor faces up to two years of imprisonment if the debtor is convicted. In reality, the creditor does not even have to wait for the end of the litigation to get the debtor imprisoned. The debtor can be arrested at the beginning of the litigation so that the debtor can be produced before the court. In some cases, the debtor can also be imprisoned for the duration of trial under S.138. In contrast, a civil case proceeds without the debtor, if the debtor chooses not to appear. Most people will pay up to avoid being imprisoned, which gives heart to creditors.

When faced with legal difficulties around land title, it is better for the creditor to threaten imprisonment, and have the borrower solve the problem of selling the land, instead of seizing collateral and then facing legal difficulties in liquidating them.

As a consequence, after the new law was established in 1988, creditors started using cheques as a security. Creditors frequently demand that the debtor provide post-dated cheques for loan amounts. These cheques are payable deep into the future -- sometimes extending to multiple years. In such cases, both parties are aware that the cheque drawer does not have the money in the bank account at the point in time when the cheque was signed. Creditors sometimes demand a separate cheque for each instalment of loan repayment. Consequently, a debtor for a five-year loan may write 60 post-dated cheques. On a similar note, landlords sometimes asked for post-dated cheques for the payment of rent at multiple time points in the future.

Modern economies do not have a debtors prison: the choice of filing for bankruptcy is always there, in which case the creditor gets a low recovery rate. On one hand, in India, there is no legal framework for personal bankruptcy. When threatened with jail time, the borrower may reach into her web of relationships, and borrow from the community. This increases the resources available to the lender.

Weighing the pros and cons

The introduction of S.138 has thus exerted many complex impacts upon the working of the economy.

An increased level of violence in society
More people go jail, and more threats of incarceration are bandied about. This is a less civilised society.
Increased interest in lending
When lenders are given greater certainty about recoveries, they are likely to be more willing to lend to persons that might otherwise be excluded from the credit market.
Diminished interest in borrowing
When borrowers are shown the possibility of jail time, they will be more cautious and avoid borrowing. That has its own welfare consequences.
Conditions for state failure
The prospect of jail time is a `high stakes' situation where the policing system gets to make decisions which have a high impact upon the life of a citizen. This increases the incentives for corruption.
Hindering the emergence of a modern economy
All advanced economies have moved away from debtor's prison, and evolved civil mechanisms around borrowing, collateral and bankruptcy. These pathways reduce the extent of violence in society and increases user confidence in borrowing.
The threat versus the cash
Jail time is indeed a potent threat and creates strong incentives for the borrower to obtain cash, either by borrowing from someone else or by liquidating opaque assets. But once a person goes to jail, all future payments to the lender are stopped. With more civil processes of collatoral and bankruptcy, there is the strategy of keeping the delinquent active in economic life, and obtaining a stream of cashflows to the lender.
Incentives for policy makers
Lenders that got comfortable with the use of S.138 were less inclined to persuade policy makers of the need for the institutional apparatus of the credit market.

Conclusion

The introduction of S.138 into the N.I. Act in 1988 was a response to a problem of the time. Some other countries, like Taiwan, had also criminalised cheque bouncing. However, most countries have walked back since then because credit systems have improved and the use of cheques have declined. In those countries, cheques are not used as collateral for loans.

There is a strong argument for repealing this section. The consequences of such a repeal will, however, also be far reaching, particularly in the context where the institutional apparatus for contract enforcement remain weak. It is interesting to look at the list, presented above, of the consequences of criminalising cheque bouncing. We can then ask: Which of these would flip around and arise, in reverse, when cheque bouncing is de-criminalised.

Shubho Roy and Ajay Shah are researchers at XKDR Forum.

Friday, February 23, 2024

Announcements

Upcoming Conference: Electricity Reforms in the Economic Strategy of Tamil Nadu

XKDR Forum and TrustBridge Rule of Law Foundation, are hosting a conference on 'Electricity Reforms in the Economic Strategy of Tamil Nadu', on 29 February 2024, in Chennai.

Tamil Nadu is one of the most important states in India from the perspective of energy transition. It was one of the first states in India to have achieved almost universal electrification and was also at the forefront of the transition to renewables - both wind and solar - in the country. The session hosts a discussion on a roadmap for reforms in the electricity sector, bringing together the team's year-long research towards identifying problems and strategies for the state's energy transition and economic growth.

Program Design:

11:00 - 11:45: Electricity Reforms in the Economic Strategy of Tamil Nadu

Presenter: Ajay Shah, XKDR Forum


11:45 - 13:00: Open Discussion

Moderator: Akshay Jaitly, Trilegal and TrustBridge Rule of Law Foundation


13:00 onwards: Lunch


Date: 29 February 2024 (Thursday)
Time: 11:00 am - 1:00 pm
Location: Taj Coromandel, Chennai.


The event is in-person and you can register here!

Monday, January 15, 2024

Solarisation in agriculture in Tamil Nadu

by Susan Thomas, Renuka Sane, Ajay Shah.

Highly subsidised electricity for farmers is an important problem faced in the working of the electricity sector. With falling prices of solar panels, there is the possibility of government subsidising solar panels established by farmers.

This could potentially induce welfare gains in several directions.

  1. The fiscal burden imposed by the subsidy could decline.
  2. The pricing distortion in electricity (where commercial / industrial / domestic buyers are overcharged) could decline.
  3. Farmers could earn a revenue selling their surplus electricity to the grid.
  4. Farmers could become more thoughtful in their extraction of ground water when they face an opportunity cost, in the sense that the electricity that is not used to pump water is a revenue generator for them. This would yield welfare gains by diminishing the `tragedy of the commons' in ground water.

These possibilities turn on careful calculations. Whether some or all of these gains are obtained depends on insolation, the magnitude of water required, the energy cost of extracting the water, the cost of solar panels and the price paid by the grid. There will not be one answer within a state, and therefore there will not be one optimal policy within a state. (Similarly, the economic possibilities from such pathways will vary greatly across the breadth of the country).

In a recent paper, Solarisation in agriculture in Tamil Nadu: A first principles evaluation, we try to engage in this careful calculation for one district (Erode) in Tamil Nadu. We analyse a corner solution: one where the government pays for the full cost of the solar panel. 

The results turn on the price at which the surplus energy, that comes from the farmer to the discom, is sold. If the discom is able to sell this energy at the (high) prices that are charged to the commercial and industrial ("C&I") customers, then the corner solution is financially efficient for the grid. At lower prices, the proposition is less attractive.

 One important parameter that influences the results -- the price of solar panels -- is likely to decline in the future. Hence, we simulate the scenario with lower costs. We find this expands the class of situations where solarisation in agriculture is useful.

This paper is about one district (Erode) in Tamil Nadu. The methods adopted are general and could be applied to other locations in India. The answers are likely to vary considerably depending on the precise setting. There is value in discovering how this varies across India.

This is a field with many intricacies in implementation. These include the mechanism of selling surplus electricity, the choice of the tariff paid to the farmer, the problems of (the lack of) metering of electricity connections to farmers, the trustworthiness of the government on timely payments to farmers, the financing mechanism for the capital cost the puzzles of operations and maintenance at the level of one farmer, and the path to a sound monitoring and evaluation of such programs. These are much studied areas where considerable research has taken place. These discussions will improve through using the carefully constructed numerical estimates, on a per-district basis, all across the country.

Saturday, January 13, 2024

Survey-based measurement of Indian courts

by Pavithra Manivannan, Susan Thomas, and Bhargavi Zaveri-Shah.

Public institutions do not face a market test. Achieving state capacity is about establishing checks and balances. The traditional idea is to instrument the operations, and construct an operational MIS, which is released into the public domain. Through this, deficiencies of the working of the organisation are visible to researchers and the public. The other pathway is to ask the persons who interact with the state institution about what they feel, to elicit their perceptions. This is an important pathway to obtain evidence and thus create feedback loops. For instance, citizen surveys are commonly used to assess the quality and impact of public services such as health and education (UNDP 2021, Clifton et al, 2020, OECD-ADB 2019).

In the legal system, perception surveys of court users can generate useful knowledge about how well courts function in their delivery of justice (National Center for State Courts, 2005). Ongoing surveys of user experience of courts can help measure the performance of a component of the entire legal system, and in assessing the impact of interventions made for reforming the legal system.

Surveys of court users and the public on their perception of the judiciary have been prevalent in developed countries from the 1990s, and are gaining currency in India (eg., Dougherty et al, 2006; Rottman and Tyler, 2014; Staats et al, 2005; Daksh 2016). Such surveys seek to capture the perceptions of court users on qualitative metrics (Manivannan et al, 2022). Such metrics can be used to evaluate the functioning of a single court, or compare alternative courts.

On one hand, perceptions are not reality. On the other hand, the views of end-users of the justice system are particularly important because, ultimately, the justice system exists to serve end-users whose interests and preferences may differ from those of judges and lawyers. We can readily discern certain difficulties in survey-based measurement of perceptions:

  1. There are many different users of a court, who differ in their extent of knowledge. Litigants who see a court case as a disruption of their daily lives, may see things differently when compared with lawyers, for whom courts are part of their professional lives.
  2. A person who loses a case is likely to be unhappy with his experience of the court and vice versa.
  3. Different individuals might be working on non-comparable cases, and their subjective experience of the court is then not comparable.
  4. It is not clear what is an objective benchmark of sound performance. A perfect court may be prohibitively expensive. Users of courts may have normalised a variety of difficulties; their `satisfaction' may only flow from learned helplessness.
  5. It is important to narrowly measure a court or a group of courts, and make claims about the narrow unit of observation, as opposed to bigger claims about the Indian legal system.

In 2023, we conducted two pilot surveys to evaluate their utility as feedback loops for courts.

One survey was administered to understand the functioning of five alternative forums that can be approached to adjudicate matters of debt disputes: the Bombay benches of the National Company Law Tribunal (NCLT), the Debt Recovery Tribunal (DRT), the Bombay High Court (Bom HC), the Metropolitan Magistrate (MM) courts (which adjudicates criminal proceedings for cheque bouncing cases), and the Alternative Dispute Resolution (ADR) process.

To help improve data quality, the survey was conducted on practitioners who had multiple instances of interacting with the five courts. By selecting practitioners that have had repeated instances of approaching these forums to resolve disputes, the survey results are less vulnerable to the 'loser' effect. To obtain comparability, we presented a hypothetical, canonical problem of debt dispute resolution to each survey respondent. We then asked them to rank the five forums on five dimensions of court performance, namely, efficiency, effectiveness, predictability, independence, cost and convenience, and calculated the average rank for each forum on each of these dimensions.

The second survey was conducted with litigants at the DRT, with the objective of understanding the functioning of this court. For this, we deployed a team of four, who visited the premises of the Bombay bench of the DRT. The team administered a survey questionnaire on individuals, in order to evaluate the performance of the DRT on the above mentioned five dimensions. The participants were asked to rate their experience at the DRT on a five-point scale.

Method

Survey design
We used a combination of qualitative (in-depth expert interviews and open-ended comments) and quantitative surveys (multiple choice and scaled questions). Qualitative surveys with experts provide more contextual insights, enable comprehensive analysis. They helped validate our founding conjecture, the idea that there was a class of disputes which could go to multiple different forums. However, these surveys were time-intensive and it was difficult to obtain the interest and involvement of experts.
Survey mode
We administered the survey in both online and offline formats. Surveying litigants on court premises was challenging in two ways. First, litigants do not always accompany their lawyers to courts, especially in disputes of larger sizes involving firms. Second, one forum may deal with multiple type of disputes (civil v. criminal; mergers v. insolvency). This poses difficulty in identifying a litigant with a desired case-type.

The questionnaire used for the surveys and the responses collected can be found here.

Results: The perceptions of practitioners

The practitioner survey involved eliciting their choice of forum for the following hypothetical, canonical problem:

Q is a large public listed company. It has availed of a working capital loan of Rs. 7 crores from N, a small sized NBFC, repayable within three years with simple interest @16% p.a. Q and N are 100% domestically owned. As collateral for the loan, Q has granted N a floating charge over some of its movable assets, for example, its machinery or its inventory. One year into the loan, Q defaults on its loan to N. The outstanding amount exceeds Rs.1 crore. Post-dated cheques issued by Q towards interest payment bounce due to insufficient funds. The collateral is not sufficient to cover the outstanding amount. You are advising N.

The survey respondents were asked to make two assumptions, namely, that the limitation period is the same across all the courts; and that all courts have jurisdiction.

We collected responses from 18 respondents, of which 16 were lawyers and two were key managerial personnel at an asset reconstruction company and a debt restructuring advisory firm. Six of our respondents had between 20 to 30 years of experience in this area, eight of them had experience of less than 20 years, and two of them had more than 30 years experience in this field. They had significant experience with many of the venues of interest: 14 had experience with the NCLT and the Bom HC, 11 with the DRT and ADR process, and 5 with the MM Courts.

We aggregated the ranks assigned by the respondents to each of these forums on the parameters of independence, efficiency, effectiveness, predictability and access, and averaged them to arrive at an overall rank for each forum. The specific statements on which the respondents ranked the forums and their ranks are presented in Table 1. The forums are arranged in increasing order of the average rankings on each parameter. The NCLT was ranked the highest on the parameter of Efficiency, followed by ADR, the Bom HC, the DRT and the Metropolitan Magistrate. On the other hand, the Bom HC was ranked as the most preferred forum of choice on the parameter of independence.

Table 1: Preference ordering of five debt enforcement forums
Metric Survey Statement Ranking
1 2 3 4 5
Efficiency Most likely to dispose of my matter in a timely manner NCLT ADR Bom HC  DRT MM Courts 
Effectiveness Easiest to recover the amount awarded in the judgement decree.   NCLT Bom HC  DRT, ADR  MM Courts
Predictability  (i) Expected sequence of stages in my matter was clear. NCLT ADR Bom HC  DRT MM Courts 
(ii) Hearings are most likely to be held as scheduled. ADR NCLT Bom HC  MM Courts  DRT
Independence   Decisions are most likely made based on the merits of the case. Bom HC  ADR NCLT MM Courts  DRT
Access (i) Can afford to take my case to this forum. MM Courts  DRT NCLT Bom HC  ADR
(ii) Ease of navigation; staff helpfulness; website; ease of filing process ADR Bom HC  NCLT DRT MM Courts 

Table 1 contains new insights on a specific court on each attribute. For example, while the Bom HC and the ADR process are perceived to be most unbiased, they are perceived as more expensive to access. ADR is perceived to be most predictable, but less effective on actually getting the relief. The NCLT, on the other hand, is perceived to be more efficient and effective, when compared to the other forums, but less likely to also be unbiased. The DRT and the Metropolitan Magistrate courts are perceived unfavourably on all aspects, except affordability.

Results: The perceptions of litigants

The in-person survey conducted at the DRT observed 55 persons, who were presently a party to a dispute at the DRT. Among these, 24 were debtors, 19 were creditors, and 12 belonged to the residual category, such as court/privately appointed receivers and auction awardees. Of these, 30.6% were at early stages (admission), 28.6% were at advanced stages (such as post-admission or pending last hearing), and 22.4% were awaiting a final hearing or pronouncement of judgement.

Litigants at the DRT had more positive perceptions than practitioners. Litigants ranked the DRT the highest on predictability of the hearing: most litigants agreed that when a hearing for their case is scheduled at the DRT, it will be held on the scheduled date. About 67-69% of litigants perceived the DRT to be an affordable and unbiased forum to resolve their dispute. More creditors ranked it higher (85-89%) on these two metrics than debtors (58-62%). However, 52% of litigants did not think that the DRT resolves cases in a timely manner.

Discussion

Good performance by the judicial branch in a country is essential. As with all aspects of public policy, this requires the loop of evidence, identification of difficulties, creative policy proposals, policy reforms, and measurement of the gains. In the legal system, generally, evidence and measurement involves quantitative measures. In this article, we have shown a case study where survey-based evidence was useful. This constitutes a useful additional pathway to measurement of the legal system.

Litigants are the ultimate end-users of courts, so their views matter greatly, but their information set may be limited. Legal practitioners have better information through repeated interactions and potentially observation of multiple venues, but their views may not capture the views of the litigants themselves. In the future, it would be useful to go further, by way of surveying the general public, measuring the view of persons who have not experienced litigation at a given location.

References

Shaun Bowler, Joseph L. Staats, and Jonathan T. Hiskey (2005). Measuring Judicial Performance in Latin America, Latin American Politics and Society.

Judith Cliftona, Marcos Fernandez-Gutierrez and Michael Howlett (2020). Assessing public services from the citizen perspective: What can we learn from surveys?, Journal of Economic Policy Reform.

Daksh (2016). Access to Justice Survey, A DAKSH report.

David B. Rottman and Tom R. Tyler (2014). Thinking about judges and judicial performance: Perspective of the Public and Court users, Onati Socio-legal Series.

Devendra Damle and Tushar Anand (2020). Problems with the e-Courts data, NIPFP Working Paper Series 314.

George W. Dougherty, Stephanie A. Lindquist and Mark D. Bradbury (2006). Evaluating Performance in State Judicial Institutions: Trust and Confidence in the Georgia Judiciary, State and Local Government Review.

Institute of Social Studies and Analysis (2021). Satisfaction with Public Services in Georgia, United Nations Development Programme.

National Center for State Courts (2005). CourTools: Trial Court Performance Measures.

Pavithra Manivannan, Susan Thomas and Bhargavi Zaveri-Shah (2022). Evaluating contract enforcement by courts in India: a litigant's lens, XKDR Working Paper No. 16.

Pavithra Manivannan, Susan Thomas and Bhargavi Zaveri-Shah (2023). Helping litigants make informed choices in resolving debt disputes, The Leap Blog.

OECD-ADB (2019). Government at a Glance Southeast Asia, Serving Citizens: Citizen satisfaction with public services and institutions, OECD Publishing, Paris.


Pavithra Manivannan and Susan Thomas are researchers at XKDR Forum, Mumbai. Bhargavi Zaveri-Shah is a doctoral candidate at the National University of Singapore. We thank Surya Prakash B.S., Renuka Sane, and Anjali Sharma for their suggestions on the design of the surveys. We acknowledge the very diligent assistance by Nell Crasto and Balveer Godara, students at Kirit P. Mehta School of Law, NMIMS Mumbai, on conducting the litigant survey. We are grateful to all the survey respondents for their generous participation, and thank Mahesh Krishnamurthy, K.P. Krishnan, Sachin Malhan, Harish Narsappa, Rashika Narain, Geetika Palta, Siddarth Raman, Ajay Shah, and Arun Thiruvengadam for their comments and suggestions on this work.