India’s corporate honchos "must invest" in law, admit: Divisive moves hamper growth

By Gagan Sethi*
While it was good news recently that India jumped 23 points to the 77th rank (out of 185 countries ranked) in Ease of Doing Business, the World Bank’s assessment precludes a crucial factor: As it has admitted, its rankings do not “measure all aspects of the business environment that matter to firms or investors”.
Indeed, the World Bank ranking only deals with issues related with corporate experience with government regulations – such as easy or difficult to start a business, obtain a construction permit, get electricity, register property, enforce contracts, trade across borders, get credit, pay taxes, resolve insolvency, and protecting the minority investor.
No wonder, Kaushik Basu, a former chief economist of the World Bank, warning about the damage recent spate of lynchings may have done to the country's goal of becoming an economic superpower, wanted not just political leaders but also corporate honchos to realise that “divisive moves” taking place in the country harm the “perception of the nation in the eyes of the world”. Worse, he added, they are “bad for growth”.
Indeed, it is time India’s corporate world begins investing in ensuring that rule of law at the grassroots level does not run riot. It wouldn’t be out of place here to juxtapose the World Bank’s Ease of Doing Business with the World Justice Project’s Rule of Law Index, which shows that while India’s overall index is 62nd (out of 113 countries), the breakup of the index suggests where India is doing poorly: In order and security the country ranks 98th, in delivery of civil justice it ranks 97th, and in fundamental rights it ranks 75th.
The corporate world must know: When marginalized sections do not get justice, they are forced to look for options, including mafias and dons. As a person who has been living in Ahmedabad, I know how, during the recurrent communal riots in 1980s and the resultant curfews that plague the city, Abdul Latif, a fierce underworld don, exhibited his ruthless control over hearts and minds of a section of the population. During riots, he would supply food, clothing and money to the poor, acquiring a Robin Hood type image.
Gujarat’s former chief minister Amarsinh Choudhary (1985-89), who reportedly kept Latif in check during his tenure, succinctly noted, "He has been shrewd enough to exploit the weaknesses of local Muslims to his advantage." In early 1987, lodged in jail, he contested the Ahmedabad Municipal Corporation elections from five wards and won in all five!
While a similar gangster, Raju Risaldar, involved in extortion, murder and contract killing, operated in Vadodara, seeking to acquire a similar image among the poorer sections of the majority community, Latif’s symbol was later used to ignite communal passion by the Hindu right-wing with the aim of destroying trade and business activities run by the Muslim community during repeated communal riots, the last one, of 2002, being the deadliest, leading to the massacre of more than 1,000 people, majority of them Muslims, many of whose houses, shops and business establishments were razed to ground.
Indeed, violence in India has had a deleterious impact on India’s economy. India lost as much as $ 341.7 billion in 2014 due to surging violence and conflicts, which was equivalent to Rs 2,173,273 crore at the then exchange rate. This meant, each Indian lost an amount of Rs 15,077. An update for 2017 by the Institute of Economics and Peace, Australia, says that dealing with violence cost India $1.19 trillion (Rs 80 lakh crore), or $595 (Rs 40,000) per capita. The figure is 9% of the country’s Gross Domestic Product.
As part of its corporate social responsibility (CSR), the corporate world is known to be investing in education and healthcare. However, regrettably, it has done little to ensure access to justice and establishing rule of law. My involvement with the voluntary sector suggests that there is a huge dearth of community-based legal centres which could help minorities, women, Dalits, tribals and other socially vulnerable sections to get access to the rights guaranteed to them.

At the Centre for Social Justice (CSJ), we have been running a network of law centres across, not just in Gujarat but also in Madhya Pradesh, Rajasthan, Chhattisgarh, Bihar, Jharkhand, Assam, Odisha, Andhra Pradesh and Karnataka, responding to nearly 3,000 cases a year.
Our centres, running for the last 30 years, consist of lawyers, paralegals and researchers, who are passionate about making a difference. However, they are unable to cope with the huge demand-and-supply gap that exists at the grassroots level. It’s a huge task: Providing legal aid, helping document complaints, doing fact findings, filing cases, contacting relevant authorities, pushing entitlement claims, spreading legal awareness, public advocacy campaigns, to training young lawyers and paralegals. It needs enlightened corporate backing.
A well-known business leader and philanthropist Ravi Venkatesan, who is a special representative for Young People & Innovation, UNICEF, has rightly insisted in a recent article that “changemakers across the spectrum must come together to help create a citizen-centric legal system.” He notes that, as of today, over 56 lakh cases pending for over five years, and few citizens rely on the judiciary to resolve their disputes. While vacancies are rampant in the judiciary – it is as high as 40% in High Courts – India’s 67% undertrials, double the global average.
Quoting a Bar Council of India survey, Venkatesan notes that, on one hand, over 60% of the lawyers practising in India are fake, on the other, the cost of judicial access is exorbitant: A litigant reportedly spends about Rs 500 per day to attend court, and another Rs 900 Rs day in lost wages. Indeed, marginalized sections face a broken judicial system which an on average takes two years to deliver justice. The situation gets worst counfounded because of lack of trust in the law enforcing bodies, with people fearing approaching police for justice.
The issue is, is this situation good for business? Doesn’t it provide a feeding ground for anti-social elements, corrupt politicians and rabble rousers? Not without reason, local mafias like Latif and khap panchayats intervene to “solve” people’s issues. One must admit, it is not a very healthy situation for the business to grow and flourish. There is reason to wonder: Shouldn’t changemakers from business, legal fraternity and civil society come together, dialogue and collaborate?
We at the CSJ believe that there is a clear case for the business to support and enhance rule of law as part of CSR activity. The private sector involvement in CSR must rely on ways to enhance rule of law by helping build strong grassroots legal institutions.
Involvement in ensuring that development-induced displacement is reduced, for instance, would significantly eradicate dependence on courts, helping save costs. After all, effective governance of law can help reduce external costs of corporates, such as bribes, litigation costs, etc. Inside the business establishment, it would provide a better work environment for the employees.
The voluntary sector can play a critical gap here by filling up the skill and capacity gap, which community-based organizations (CSOs) lack. As of today, CSR efforts are limited in scope and range, something that CSOs can aid in expanding with professional NGO help. It’s a win-win situation for both. NGOs and CSOs can learn and be increasingly aware of managerial capacities, human resource, capital and result-oriented frameworks from the corporate world.

Gagan Sethi

However, the groundwork has to be done by committed lawyers, legitimised paralegals in ensuring speedy justice without fear or favour. Azim Premjis, Nilekenis and the Tatas have at least begun engaging, but the support is to be much larger if we have to make a difference!
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*Well-known development trainer; chair, Janvikas, Centre for Social Justice, Ahmedabad. 
An abridged version of this article was first published in India Development Review and Counterview.Org