The Indian economy has grown rapidly in the last three decades despite a weak legal system. For instance, India ranks extremely low in the ease of contract enforcement, which is usually considered a key element of a growth-supportive environment. Why is this so? Part of the answer comes from India’s colonial period, when the foundations of today’s legal infrastructure were laid. Law in colonial India did respond to the needs of economic actors, but British Indian law also had other compelling objectives and faced many constraints. A key goal was to help maintain British political control over the subcontinent. It was also expedient, especially in the early phase of British rule, to draw on existing indigenous traditions in law, sometimes religious, and sometimes “customary.” The legal system was also affected by the Raj’s limited administrative capacity and by resource constraints. Borrowing from British legal precedent was not always done judiciously. The outcome was an incoherent entity, increasingly dysfunctional by the end of the colonial period.
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