To become a great nation, all must learn to live by the law

There are plenty of examples of people getting away with all sorts of crimes — with unpaid loans to banks, with duping investors through Ponzi schemes, with wilful breach of contract, with road accidents resulting in death, the list is long. In each case, the perpetrator dares the victim — ‘jo karna hai woh karo’ (do whatever you want to do) — with full confidence that the judicial system leans in his favour through unbelievably lengthy delays.

No country can hope to become a great nation unless there is respect for law.

And, of course, there is the willingness of the Indian judiciary to grant adjournments ad infinitum, thereby showing great partiality towards lawyers and the fraudsters than to the victims and their sorrow.

Other countries which do not show such leniency score much higher than India does, in its Ease of Doing Business.

India ranks a miserable 130th out of 189 countries in Ease of Doing Business according to a World Bank group report. The ranking is based on 10 parameters.

India’s best rank is 8 on the parameter ‘Protecting Minority Investors’ and this is thanks to a strong and independent regulator, SEBI, and to the transparent processes it has laid down.

The two worst ranks for India are on the parameters ‘Dealing with Construction Permits’ (183/189) and ‘Enforcing Contracts’ (178/189). The former breeds corruption. The latter breeds disdain for law.

What does this have to do with India’s stock market, or with India’s growth? Everything.

According to India Ratings & Research, India is raising money through masala bonds (rupee denominated bonds in foreign markets) at 7.5 per cent for three years, and 7.55 per cent for 10 years.

We just cannot afford the luxury of a sleepy judicial system doling out adjournments and delaying justice to those who deserve harsh punishment.

Just look at the devastation caused by those companies which do not, or cannot, keep up with the pace of technological change.

Last week Verizon bought Yahoo’s Internet business (but not its stakes in Alibaba and Yahoo! Japan, which are far more valuable), for $4.8 billion. Yahoo! was the first Internet company to go for an IPO and the phenomenal gains made by those who applied for the IPO caused the Internet revolution. At its peak it was valued at more than $100 billion.

The Yahoo! management had made plenty of mistakes. It turned down an offer to buy Google for $1 billion in 1998. The founders of the Alta Vista search engine, which went on to become Google, made the offer to be able to continue their studies.

In 2000, Yahoo! turned down an offer from Microsoft to buy Yahoo for $45 billion. This is the merciless advent of technological change.

A country’s judicial system has to keep pace. So, too, must the political system. If we want to become a mature democracy, we must act mature.

(The writer is India Head, EuroMoney Conferences)

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