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From opaque to transparent

Instead of treating lobbying as a dirty word, India must bring it within a regulatory system.

india Updated: Dec 12, 2012 01:16 IST

For four decades after independence, India was mired in a licence-permit-raj system in which many considered wealth creation to be a sin. So, it isn’t any surprise that in the musty corridors of Lutyens’ Delhi, lobbying is frowned upon in much the same way an industrial licence was some years ago. India Inc pays millions of dollars every year engaging firms to champion its causes in the US and other countries where it has business interests. According to a disclosure report filed with the Senate and the House of Representatives a few years ago, a large Indian conglomerate had engaged a high-profile and influential lobbyist group that has many Fortune 500 firms and foreign governments as its clients, for providing “strategic counsel on issues related to trade”. Information technology (IT) firms have never shied away from hiring specialist firms to advocate their causes in the US.

Articulation of views is a healthy democratic practice. Lobbying, as is understood and legitimately practised in matured economies, is not new to India. The process of consultation is central to any major policy or law-making exercise in the world’s largest democracy. For instance, before a bill is voted into law, the legislation is subjected to an elaborate process of discussion. Parliament’s standing committees hear out the views of all stakeholders — government as well as private entities — before giving their opinion on any issue or legislation. Likewise, India’s annual budget making exercise is another case in point showcasing the tradition of discussion. Each year, the finance ministry holds consultations with stakeholders — industry associations, chambers of commerce, farmers’ groups and employees unions — in North Block on Raisina Hill, the seat of power. Each group comes armed with demands for tax breaks and fiscal sops. The budget is more than an annual accounting exercise and, therefore, it is vital to pay attention to points and counter-points. Indian democracy is often criticised for sluggish decision-making. But if the lack of speed is because of the need to listen to a wide array of voices, the wait is worth the effort.

US retail giant Walmart’s declaration to the US Senate that it spent about $25 million since 2008 on lobbying activities that included “enhanced market access for investment in India” needs to be seen in this context. The government has taken the right step by declaring that it’s open to an inquiry into Walmart’s lobbying practices. In India, there is no law that bars lobbying. But it may be time to create a statutory structure for regulation of lobbying firms clearly laying down the rules for mandatory disclosure of earnings, conflict of interest and compulsory registration of such companies. A well-defined regulatory architecture, created on the lines of the US Lobbying Disclosure Act, will remove the stigma associated with the word and eliminate opaqueness in dealings with the government.