Monday 7 November 2016

The unlit world of lobbying in India


This is not the most trending topic out there, but I think it is one of the most important thing among them all with the government stepping in to increaseIndia’s rankingin“Ease of doing business”. I think, therefore, the concept of ‘Lobbying’ should be at the forefront of public discourse. 


For those who do not know what lobbying is, it a group of people who are (mostly lawyers, senior journalists) paid by private interests to influence the government or politicians to make or to amend governmental policies to suit their interests; the key word being ‘INFLUENCE’.
In simple terms, suppose acompany ‘X’ wants to setup a pen manufacturing company in State of ‘Y’, then it pays these lobbyists, who inturn‘influence’ the political class of that Y state, to change its laws or introduce subsidies in such a way that it becomes easier for company ‘X’to startits business at minimum cost and maximum profit. To illustrate further, if thegovernment wishes to purchase certain vehicles for use as ambulance, then private companies who make such vehicles could ‘influence’ the government to introduce certain criteria in selection/tender process of such vehicles, thereby making their product, the only viable option for purchase, thereby excluding other competitors.

The two examples given above are nothing but the recent instances of the two biggest corruption scams brought to the limelight by Media reports and the Comptroller and Auditor General (CAG) respectively. These are infamously known as the Wal-Mart,FDI in retail and Augusta-Westland scams.  If lobbing was regularised, then such scams could have been easily avoided. Just to be clear, I’m not suggesting that bribes should be made legal; I’m saying that lobbying should be. As I’ve said the key word is ‘influence’ andhow the lobbyist ‘influence’ politicians is the moot point.
Let’s not kid ourselves, we can never actually get rid of lobbyist or lobbying. The concept is considered by some as old as democracy itself. The politicians are always going to get influenced by groups or sections, specifically the rich and powerful. In my opinion there is nothing wrong with influencing them, it’s actually healthy in a democracy. There is nothing wrong in it, as long as some moral codesare observed. This word ‘influence’ is a big grey area. It is indeed a difficult task to distinguish right from wrong.
Let me paint a picturefor you. Paying for politicians camping fund, who in turn grants project tender to you, is certainly wrong. On the face of it, it is a clear quid pro quo. But, to pay money to have a conference setup where independent experts explain how the pros outweigh the cons, thereby prompting the government to probably implement these suggestions, is certainly right. As I have already said, it is very difficult to draw a line, demarcating right from wrong.
It could be that, the money paid may not necessarily be the reason why tender was given to the company; their bid could actually have been the lowest of all. Itcould also be that, in the same conference many of the experts might have been paid to give a pre-determinedopinion by hiding certain facts. It is, as how the courts say, “depends on facts and circumstances of each case”. When it is very subjective and difficult to have a line it makes even more sense to at least have a reference point. Therefore it is imperative that, lobbying is regularised.
In India, the only law that has some relevance to lobbying is Section 7 of the Prevention of Corruption Act, 1988, which makes it illegal for a “public servant taking gratification other than legal remuneration in respect of an official Act”. At the moment, Lobbying is not yet recognized in any form in India and it is growing at a rampant speed with no form of regularisation whatsoever.  Thus there are no formal organizations for lobbying. Operations like these are being routed through Public Relations Firms and some well-connected individuals. However due to lack of organizational set up these firms largely operate by word of mouth. Scams like the recent 2G spectrum scam in India highlights the dire need to regulate legitimate lobbying.
Let us understand what regularised lobbying is and how regularisation will help. In USA, lobbying is legal (Not to be mistaken that lobbying is not illegal in India, but giving bribe to public officer to perform or not to perform certain duty is). USA by Lobbying Disclosure Act (LDA), 1995 makes it mandatory for the lobbyists to register with the authorities and to disclose all the expenses incurred by them to influence politicians. This also includes all sorts of payments or donations made by them and which private company hired them to influence whom. Again the key word is ‘influence’ and how lobbyists tend to ‘influence’. In America, these lobbyist usually make sizable donations to the politicians’ political campaign funds so that the politicians act in line with their interests. This in my opinion is completely fine as long as we know about it.To it put it in clear perspective imagine this.  If tomorrow a politician says that “Amul is asli butter” and transfers thousands of acres of government acquired land to the company to setup production plants and says that he is doing so because the farmers will benefit with this dairy plant; All of this may be true, and the same may be done keeping in mind  the best interest of the farmers. But, if you knew that Amul has paid certain money to that politicians’election campaign funds just before and after this endorsement, then everyone will watch with keen eyes the entire tender and bidding process by which this land was allocated to Amul. Opposition will make noise if the right price is not paid by Amul; basically each step will be scrutinised. At present, we have no idea whatsoever, if there was any exchange of any kind. Just to clarify, I am not suggesting malice in every action of the government or every allotment of project or land. Rather, my point is that there exists an unregularised body which has great deal of influencing power and this power roams in the corridor of legislators, whereby bringing in certain level of opaqueness to the whole functioning of the government.
In my opinion, we should have a model similar to that of US. LDA gives a wide definition to the word ‘lobbyist’, whereby everybody is under the umbrella. It defines the term "lobbyist" as any individual who is employed or retained by a client for financial or other compensation for services that include more than one lobbying contact, other than an individual whose lobbying activities constitute less than 20 percent of the time engaged in the services provided by such individual to that client over a six-month period". It defines the term “client” as "any person or entity that employs or retains another person for financial or other compensation to conduct lobbying activities on behalf of that person or entity. A person or entity whose employees act as lobbyists on its own behalf is both a client and an employer of such employees." The Act also makes it compulsory for the lobbyist to register with authorities and the company to make periodic disclosures about the total money spent for lobbying activities. Positives from LDA should be taken in by excluding loopholes(negatives) like “activities constitute less than 20% of time engaged” or “Any organization that contributes less than $10,000 towards lobbying activities need not register” etc. All these steps would not be sufficient to get complete transparency. Systematic electoral reforms and transparency in functioning of political parties will also be required for that. Same will be discussed in my next blog. But, the importance of regularising lobbying should be at the forefront. Now, even more so as the economic progression of the country is happening at great pace and without any system in place, it is going to be another scam just around the corner. When we abuse the existing systems; one can only imagine what happens when there isn’t any.
The current Modi Government has taken some baby steps in this front. I myself find them to be questionable, but there are some steps. The Government through the last Finance Bill has passed an amendment to Foreign Contribution Regulation Act, 2010 (FCRA), whereby, foreign origin companies can give donations to NGOs and ‘political parties’. This is great, now all such transactions to political parties will be recorded and documented. However, these amendments also had a retrospective effect. Meaning, any such transactions done before this amendment (which was illegal at the time) are now legal. All the political parties now have a clean slate. I don’t understand the need of having a retrospective effect for such legislation. Furthermore, this amendment was not even in much controversy, well supported by opposition and smoothly passed in both the houses.    
It has to be understood that, lobbying is a necessary evil; it is an integral part of policy making. There is alsosome good work carried out by this means and despite the negatives, we cannot never completely remove it. Regardless of any level of reforms or regularisation, lobbying will not eliminate corruption or scams. I mean the company could easily fudge numbers and create distinction between money spent on paper and actual money spent. But, regularisation will get certain sense of transparency and accountability, which is very much needed. To get this issue into the limelight and lobby for such regulations, I have started an online petition on change.org. Click here to sign and then share on your facebook walls.