BW Legalworld, February 01, 2023
These days the country is engaged in discussion on Economic Survey 2023 and the Union Budget 2023-24. The Economic Survey provides economic trends and important data on various sectors, agricultural and industrial production, infrastructure, employment, inflation etc. The Union Budget provides the government’s policy directions for country’s growth pathways. The country is fortunately on a high growth trajectory, despite global headwinds, just overtaken Britain to occupy 5th rank, set to overtake Germany and Japan to be the 3rd economy before the end of the decade.
We are fortunate to have strong democratic institutions, at times the envy of the world. Our judicial institutions are very strong, impartial and robust, highly respected and a source of confidence in society. While their decisions are, and must be, based strictly on the tenets of law, it is also important that the long term economic impact of those decisions, particularly on GDP, employment and vulnerable sections of society are also suitably kept in view, as pointed out by several earlier decisions of the Apex Court.
The matter has been brought in sharp focus from time to time. In a landmark judgement, Shivashakti Sugar Mill Ltd. v. Shree Renuka Sugar Ltd. & Ors. Hon’ble Supreme Court made significant observations on the issue. In that case, Hon’ble Justices A K Sikri and A M Sapre in 2017 observed that the court must avoid such outcomes which has the potential to create an adverse effect on employment, growth of infrastructure, economy or the revenue of the state. The case highlighted the need to analyze the economic impact of judicial decisions.
In this case, the Hon’ble Supreme Court overruled a High Court judgment that shut down the Shivashakti Sugar Mill because it was too close to another sugar factory. The Hon’ble Supreme Court observed that judiciary must consider the interests of the economy. The Bench stated that it does not mean that it should ignore the provisions of law but it has a bounden duty to have the economic analysis and economic impact of the decisions as well.
In March 2018 the then Finance Minister Mr. Arun Jaitley had also called for discussion on the economic impact of Court cases especially in matters where there is an adverse impact on the country’s GDP and employment. Eminent jurist Harish Salve had in 2019 had also referred to the consequences of an Apex Court judgement on foreign investment in the 2G and coal allocation cases. There was a feeling that some of the Courts decisions have snatched away several precious years from Goa’s iron ore economy, India’s copper economy and so on.
A Niti Aayog-sponsored study (shorturl.at/owCS3) by Consumer Unity & Trust Society (CUTS) referred to decisions of the Supreme Court and the National Green Tribunal (NGT) in five cases – Goa Mining Case, MoPA airport case, Sterlite Copper plant case, Sand Mining case and the NCR Construction ban case – which resulted in a huge damage to the economy. The study was commissioned to “assess the economic impact of select decision of the SC and the NGT.” This was also highlighted in a recent article by Secretary General CUTS (shorturl.at/fN256).
The cascading effects of some of these judgments upon the economy at large and industry in particular will always remain a subject of debate and difficult to accurately measure. Apart from loss of employment, revenue for the exchequer and the investors’ trust, sometimes it is felt that with due respect to the concerned judgements, these may have had the unintended effect of altering India’s position in the world trade. From a net exporter, India is now a net importer of copper since the closure of the Sterlite’s copper smelter in Tuticorin in 2018. The judgment on coal mines rendering all 218 coal mines allocated between 1993 and 2011 as illegal and arbitrary would have resulted in India being more dependent on imported coal and thereby, impacting the economic growth. Similarly, in the end, there might also be a time and cost overrun for the Mopa airport; mining suspension in Goa would have also impacted the economy of the island state.
There will undoubtedly be many cases arising from time to time which may have far reaching economic consequences. As CUTS have suggested, the key to address such issues may lie in the proper economic impact analysis of such cases. “The Courts may like to undertake comprehensive ex-ante economic impact analysis facilitated by a group of experts including economists, environmentalists, sociologists, among others, to address and adjudicate public interest cases involving economically sensitive matters”. As also suggested earlier by Mr. Arun Jaitely, former Finance Minister and an eminent jurist himself, while the Courts may decide the matter as per law, they may also like to undertake economic impact analysis in suitable cases, particularly in matters relating to infrastructure.
The interface of law and economics is close and intertwining. There may be frequent cases of injunctions, ruling and directions which besides having legal dimensions for the directly involved parties, have indirect economic repercussions for the broader society.
While the substantive content of the economic policy is indeed the exclusive realm of the executive and legislative branches of the government, it may perhaps be considered relevant for our enlightened Courts to keep in view the broader economic impact of their decisions on the rest of the society, for whom they are highly respected as the temples of justice, while deciding the matter within the contours of law.
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