When lobbying is legal

The recent “revelations” that Walmart paid lobbyists in the US to lobby American policymakers to influence policy regarding access to the Indian retail market have caused great indignation among our political leaders. Statements of affront to national dignity by the legal lobbying practices of “predatory” multinational firms in another country have been expressed by ruling and opposition party leaders alike. While affront is indeed warranted, is this the right target? Walmart’s activities in the US, however distasteful or inimical to some Indian interests, were legally conducted and fully disclosed under the 1995 US Lobbying Disclosure Act. The rather more pertinent questions — who, when and, how did their Indian partner, Bharti, lobby in India; did other interests with different points of view gain access to this process — are curiously absent from the heated rhetoric of our political leaders. Indeed, the entire question of how corporate India lobbies for influence and at what cost to itself and to society, is not a question that our political crusaders seem keen to discuss. What this “incident” does tell us very clearly is that despite the Mundhras, the Jains and the Radias, we still rely on random chance and the legal rules and capacities of other countries to learn what is happening in our own and that indeed is a national affront. The important question this incident surely raises is, why has the reality of lobbying by special interests not been legally recognised and regulated in India in an effort to introduce at least some transparency and accountability to the process?

Lobbying in the corridors of power, whether local, national or international, is how policy is deliberated, designed, passed, implemented and adjudicated in countries around the world, including India. Business groups use a variety of tactics to gain access and influence to elected and appointed officials in positions to influence any of these stages. In addition to contributing money to political campaigns, groups in other countries share their technical expertise, provide data and information, testify in front of committees, inform and educate the public and political elite through studies, press conferences and workshops and mobilise their members to take part in rallies and communicate with their representatives. Lobbying holds both the promise of democratic participation and better policy, and the threat of corruption and a state captured by special interests. Experience from other countries shows that the policymaking culture that political institutions create significantly influences the extent to which these possibilities are realised.

A wealth of studies show that despite the prolific financial contributions US lobbies make to elected officials and parties, money is not a guarantor of policy influence there. Rather the reputations that groups develop as providers of credible high-quality intelligence on policies is a significant source of lobbying influence. This lesson has been learned by interest organisations in comparable emerging markets such as China and Brazil. Business, trade, professional and labour organisations in these countries invest in the technical capacity of their organisations and, as a consequence, are able to develop reputations for serving as credible representatives of their members, trustworthy mediators by policymakers and, educators of the public and the political elites on the merits of policies. This allows them to leverage resources other than money — their expertise and reputations — to influence policy. However, with some notable exceptions such as the CII and FICCI, Indian associations rely heavily on providing legal and illegal donations of money to elected policymakers for influence.

A recent study (Yadav 2011) reveals the striking contrast with another emerging market struggling with many similar political and economic challenges — Brazil. Of 158 business, trade and professional organised interest groups surveyed in Brazil, about 73 per cent cited their technical ability on sectoral issues and 48 per cent their expertise on national policy issues as a source of strong or decisive lobbying influence with elected policymakers. In contrast, of 179 Indian groups, only 30 per cent cited their technical ability on sectoral issues and 23 per cent on national policy issues as a source of policy influence. In specific policy situations, 54 per cent, a majority of Brazilian groups, report using technical information rather than money to lobby policymakers while only 22 per cent of Indian groups could make this claim.

Instead, 37 per cent of Indian groups report the direct exchange of money for policy favours in these situations while less than 10 per cent of Brazilian groups reported the same. Technical information was the single most popular means of influence in Brazil while financial donations to parties and politicians were the most popular means of gaining influence in India. These numbers paint a damaging picture of the policymaking environment in India and unfortunately explain why India has yet to develop the rudiments of a regulatory framework for lobbying.

Ask yourself — do you know how your MP voted on the last significant economic bill? What was your party’s position and how did your party vote? The sad reality in the Indian context is that the more pertinent question is, did your party or your MP bother to show up at all to vote on bills that would reshape important policies such as insurance or intellectual property rights or pensions in India? Political posturing is surely a universal parliamentary practice, but when was the last time you witnessed Indian party leaders and MPs engaging in a serious policy debate on the plenary floor? Important bills in recent years have been passed in minutes, with little debate and often without the requisite quorum of MPs present. As in the Walmart case, members seem more interested in storming the well of their parliamentary chamber prior to storming out in yet another meaningless protest rather than in engaging in a serious, educated debate on the relevant issue — in this case, regulation of lobbying practices in India.

Since neither party leaders nor MPs see any gain to their careers by developing policy reputations with voters or their peers, there is little incentive for business lobbies to invest in and use policy expertise to build productive relationships with policymakers. The result is that while 32 per cent of Brazilian groups in the 2006 survey reported suffering at least a significant impact from the sale of parliamentary votes to special interests, almost 60 per cent of Indian groups reported significant impact. This gets us back to our original question — why the process of lobbying remains unregulated in India, despite the obvious costs to corporate India in terms of domestic and global reputation, not to mention the larger cost to society, and why we must infer what Walmart or Bharti may or may not have done rather than having access to concrete information that such regulation would disclose. None of the parties to these transactions have any interest in acknowledging the domestic origins of these incentives and practices.

Yadav teaches political science at Penn State University, and has written the book ‘Political Parties, Business Groups, and Corruption in Developing Countries’

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