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Lobbying in India - The Good, Bad and the Ugly

Aug 12, 2017(16:36)
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What is Lobbying?

Probably, in India, we have heard about lobbying for wrong reasons like Nira Radia tapes, Walmart 135 crore fiasco, etc. However, let have a look into this article to know whether lobbying is good, bag or ugly. Lobbying can be defined as the act of attempting to influence the actions, policies, or decisions of officials in their daily life, most often legislators or members of regulatory agencies. Lobbying is generally done by individuals, associations, corporations, fellow legislators and advocacy groups. Professional lobbyists are people whose business is trying to influence legislation, regulation, or other government decisions, actions, or policies on behalf of a group or individual who hires them.

Didnt Understand? Here is the simple version!

For example, Mr.Arjun neighbour Krishna is the principal of a prestigious school in his area. They are acquaintances, not friends. But now Arjun younger son, Abhimanyu is older enough for school and he needs an admission in the very same school. Now, Mr.Arjun tries to surpass his relationship levels from plain acquaintance to friendship. He does not miss an opportunity to strike a conversation or do some favour, like offering help in finding a tenant for leasing Krishna vacant house. Now what do we call this?

On a higher level, industrialists meet up with ministers, make just a courtesy call and try to strike a good relationship with them. Suppose, if the Aviation Minister gave nod for Hyderabad-Sydney Airlines to take off, the concerned Airline Chief goes on a courtesy call with the minister before the business becomes materialized and later on goes on a “thank you” visit post the sanction. So what is this called?

 Mr.Arjun was doing it deliberately so that his son gets an admission based on the deeper relationship that he develops. The Airline Chief meeting is also lobbying showing his way of appreciating the consent. Both are harmless and in a way, a form of public relationship. But the same lobbying gets ugly when money gets involved or favours are traded. That is when lobbying becomes bribing, painting the whole deal in a disturbing kind.

Is lobbying legal in India?

Assertions that lobbying is equivalent to bribery are common in India and reflect the country own legal and policy ambivalence towards the practice, which, in contrast to the United States, is not yet formally recognized, let alone regulated. With no statutory or non-statutory basis for lobbying, many policymakers in India believe that it contravenes Indian law.

As a result, lobbying in India exists in a perennially grey legal and policy arena. Both local and foreign firms operating here are left with virtually no guidance on questions concerning the permissibility of lobbying or what the practice even entails.

However, a multitude of influential public relations firms across India effectively serve as corporate lobbyists for a wide variety of diverse industry interests ranging from construction to telecommunications. These firms, however, operate completely unregulated. The obvious absence of any transparency in the process has predictably led many to conclude that lobbying is both a warning sign and a cause of India corruption crisis, encouraging graft, bribery and other forms of misconduct.

As a consequence, a growing number of leading government officials and corporate experts are calling for lobbying in India to be regulated in a manner similar to that of the United States and other countries which officially recognize the practice and mandate the kind of registration and disclosure requirements memorialized in the LDA (Lobbying Disclosure Act). Such a move is long overdue and would help foster a more stable and attractive investment climate for both Indian and foreign firms, particularly in light of the Modi government efforts to advance India economic recovery. 

What is Lobbying Disclosure Act?

In US, lobbying is authorized. The Lobbying Disclosure Act, 1995, mandates registration of lobby firms and one also needs to file amount spent for lobbying and the exact purpose of the expenditure.

So will this bring an end to corruption?

The US government does recognize the fact that lobbying involves monetary transactions but does not label it as bribe and simply calls it asexpenditure. By framing rules for companies to put this on publicly available accounts, US thinks it has ushered in transparency and done away with corruption. It also becomes apparent that the lines differentiating bribe and lobbying is very blurred – one does not know where one ends and where the other begins. But as humans, we know where to draw the line and not cross over from lobbying to bribing for favors. Similarly, industrialists also know where morality begins and where lobbying ends as long as the inner barometer of integrity functions. And lobbying will mean expenditure, which is what US recognizes. For us in India, lobbying is not even recognized as a profession. And given our enviable ability to find loophole in every law and twisting it to our advantage, a lobbying law might be difficult to work for us. However, we could see a form of accountability by accounting officially at least a part of what is being spent on lobbying.

Some interesting facts about Lobbying Spends from India:

  • Tata Sons hired Cohen Group for lobbying market research in the automotive, defence and energy sectors in 2007.
  • Reliance became a client of the lobbyist Barbour, Griffith & Rogers on the unspecified issue of TRD, which could mean trade.
  • Wipro spent $33,000 on a lobbyist Melanie Carter-Maguire on issues relating to trade and visa.
  • As discussed earlier, Wal-Mart had spent close to Rs 135 crore on lobbying activities, including on issues related to enhanced market access for investment in India.

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