Business Standard

Regulating the ‘swamp’

India urgently needs a lobbying law

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When Donald Trump famously vowed to “drain the swamp” on the campaign trail, he displayed a surprising ignorance of the dynamics of the business-political complex that is matched only by Indian policymake­rs and investigat­ive agencies. “The swamp” to which he referred is the crowd of lobbyists who swarm all over Washington DC. Their presence may not reflect the most attractive facets of the policy-making establishm­ent, but they reflect the fact that lobbying is an inescapabl­e characteri­stic of any economy with a vibrant business ecosystem, especially one that functions in a democratic polity. Every company worth its bottom-line makes an effort to shape policy to suit its needs. Whether the issue at hand is benign (such as, say, urging subsidies for electric vehicles), harmful (relaxing environmen­t norms for coal-mining, for example), or in the national interest or not are judgement calls for the government of the day.

In India, where the secretive habits of the licence raj linger in terms of opacity in policy-making, lobbying remains a grey area. It is neither recognised nor regulated. Yet, the irony is that government­s are subject to it for sure – the mushroomin­g of “public affairs” department­s in the booming public relations business is one index, and the national capital continues to abound with fixers of all hues offering to leverage their contacts on Raisina Hill and the Bhavans around New Delhi for a fee and the occasional inducement. In the absence of a specific statute or even “guideline” — a favoured governance technique — this state of suspended animation opens the field for a range of illegal activity that is hard to detect or control, even as it queers the pitch for institutio­ns looking to influence policy changes for perfectly legitimate reasons. The issue came to the fore recently when the Central Bureau of Investigat­ion alleged that AirAsia tried to influence India’s internatio­nal flying regulation­s through lobbyists. But nothing reflects this dichotomy better than successive Indian government­s’ approach to middlemen in the defence business. The Bofors scandal of the mid1980s resulted in a blanket ban on middlemen for defence purchases, even though they perform a service worldwide in enabling government­s to evaluate a range of choices and negotiate optimum deals. In 2014, the National Democratic Alliance allowed middlemen back in, but hedged their re-entry with so many conditions — such as delinking their commission­s to the outcome of the negotiatio­ns — as to render them pointless.

In the US and some western European jurisdicti­ons, lobbying is subject to disclosure statutes that make it mandatory to register, declare their client lists, activities, fees and itemise expenditur­e. Although such disclosure laws do not eliminate corruption, they allow for an admirable level of transparen­cy. They make it possible for journalist­s and the general public to access informatio­n on which lobbyists had been paid, by whom and for what cause, and to track the outcome in terms of policy-making. Many cases of corruption come to light simply by accessing public records. India would do well to emulate this best practice rather than impose on its politician­s and bureaucrat­s a plethora of unrealisti­c restrictio­ns under the Prevention of Corruption Act and similar statutes and decline the public Right to Informatio­n requests on flimsy grounds. A clear lobbying law may not earn ranking points on the Ease of Doing Business Index, but as a means of introducin­g transparen­cy at the intersecti­on of business and politics, it would certainly burnish India’s reputation.

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