Indian courts need expert guidance as they increasingly rule on complex economic matters

The state government appealed, upon which a division bench of the high court maintained the stay, but required movie theatres to keep auditable records of every single ticket sold, including the price, time stamp, mode of booking, mode of payment and so on. This was to facilitate refunds should the industry association lose the case.

This in turn was stayed by the Supreme Court earlier this month, albeit with the comment that “prices should be fixed" to make cinemas more affordable.

At first glance, this saga is about the constitutionality and wisdom of the state’s direct intervention in competitive markets. At a deeper level, it is about how the judiciary is dragged into matters of economic policy.

Sometimes, as in this case, judges are called upon to decide on the legality of a piece of economic regulation. At other times, judges respond to public interest litigation with judgements that are tantamount to economic policy. The question is: how competent are our judges to make calls concerning economics?

Judicial decisions affect large sections of the economy about everything from cinema ticket prices to bankruptcies, environmental clearances, labour and tax disputes. How can the courts develop the technical expertise across vast fields of economics to make good judgements on policy matters?

This question assumes greater importance because unlike elected officials and civil servants, judges are insulated from the consequences of their decisions. Therefore, public interest demands economic reasoning from the judiciary while arriving at its verdicts.

The problem with economics in public policy is that quite often it is counter-intuitive. For instance, capping prices causes shortages, drives suppliers out of business and increases corruption or unscrupulous behaviour. Requiring cinema halls to maintain records increases costs, creates compliance nightmares and, again, increases corruption.

Furthermore, laws and regulations are often well-meaning, but have predictable unintended consequences that frustrate the objectives. Therefore, well-intentioned people can end up making a mess of economic policy.

How could we close the economics gap in our judiciary? Here are some options.

First, consult experts on a case-by-case basis. In many jurisdictions, courts seek the advice of expert witnesses or appoint amicus curiae (‘friends of the court’) on matters that require technical expertise. This is the easiest option and is available to judges at all levels in India.

There are, however, some drawbacks to this approach in the Indian context. Such experts should be available, affordable and the court must be capable of selecting the right ones. Since these experts are themselves not accountable for their opinions, we cannot be sure of their impartiality. Even so, it would be a good idea for courts to engage economists in this manner.

Second, formally appoint economic advisors as part of the court system. The prime minister and the finance minister already have such advisors, as do many state chief ministers. The Supreme Court and high courts can consider doing the same. The judges will have the benefit of privately consulting a trusted inside expert whose opinions can inform their decisions. Given the prestige such positions entail, they will attract highly talented professionals to serve fixed terms at the higher judiciary.

Third, set up an economic research department for the judiciary, along the lines of the research service of the US Congress. This would comprise a cadre of professionals with expertise in various domains of economics who can proactively prepare issue briefs for judges and also offer professional opinion on specific cases.

Such professionals can find fulfilling careers within the judicial system with opportunities to work in different high courts and the Supreme Court.

There might be other ways. Whatever the method, public interest demands that judges employ robust economic reasoning while delivering their judgements, and readily consult experts in matters of economic policy. While there is a lot of attention focused on making the courts more efficient by improving processes and deploying technology, very little goes into making the courts more effective.

Similarly, while there is a lot of scholarship connecting judicial independence to economic growth, quite often it is assumed that independence translates to expertise in technical matters. The quality of judgement matters.

It is sometimes argued that courts do not concern themselves with the substance of economic policy, but only their legality. This is not true. For one thing, it can be difficult to disentangle the procedural from the substantial. For another, the Indian judiciary has never limited itself to an overly strict interpretation of its remit. If judges were to have an assessment of the predictable consequences of capping ticket prices, they might be more circumspect in their decisions.

India needs a serious policy debate on raising the economics quotient of its judiciary.

The author is co-founder and director of The Takshashila Institution, an independent centre for research and education in public policy.