Wal-Mart row puts spotlight on lobbying in India

December 12, 2012

(Any opinions expressed here are those of the author, and not necessarily those of Thomson Reuters)

Just last week, the Congress-led coalition government overcame legislative deadlock in parliament by agreeing to and winning a symbolic vote on allowing foreign companies to invest millions of dollars in India’s retail businesses.

But a week is a long time in politics. Parliament reached another impasse, and the press returned to nouns that it usually associated with parliament — uproar and furore.

The impasse was about Wal-Mart’s disclosure of a U.S. lobbying bill of around $25 million, which includes activities to facilitate its entry into the Indian retail market.

The Bharatiya Janata Party (BJP) and others from the opposition wanted the government to investigate whether bribes were paid in India — although as WSJ India bureau chief  Paul Beckett writes, “what the BJP claims is the bribery of Indian officials is actually an effort by the U.S. government to provide full disclosure about what companies are doing when it comes to contacts with U.S. legislators”.

The world’s largest retailer, already under investigation in India for suspected violation of foreign investment rules, has said that the money was spent in the United States, where lobbying is legal.

Although the government announced an inquiry into lobbying practices by Wal-Mart on Wednesday, the controversy highlights the need for the regulation of lobbying in India.

Supreme Court lawyer Vijay Kumar says that in India “lobbying is legal in the sense that it is not forbidden”. For instance, if company executives travel to New Delhi to discuss a project with a minister, it’s not illegal. Kumar also suggests it would be tough to ban lobbying in India because, in essence, everybody does it.

Anup Bhambhani, a lawyer in the Supreme Court and the Delhi High Court, agrees that outlawing this practice would make it “murky”. For a country filled with corruption, this won’t really solve any problems.

But lobbying can take forms that may not be permissible under Indian law. Questions such as what kind of lobbying is taking place and in which environment are important to know in case someone has broken the law.

Bhambhani says that “whether lobbying done by someone is legit or not, it is necessary to lay down some rules of the game”.

“Asking for disclosure of how much money is spent on lobbying and to whom the money is paid would be a first major step,” he added.

The most infamous episode of lobbying in India would have to be the Nira Radia tapes, which were leaked in 2010 and exposed a nexus between journalists, corporates and politicians in the telecom scandal.

Working out a framework under which lobbying can be monitored is essential. But it depends on whether India’s political class has the will to bring it out in the open, making the practice more transparent.

(Aditya Kalra also contributed to this post)

One comment

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Lobbying in India should not be allowed. If allowed, legitimised,the members would enter the house with preconceived notions/made up decisions. Sometimes, there would be line ups for and against a matter. The interested parties may cause chaos by proxy war inside Parliament. May be western culture;certainly unfit for developing countries such as ours.

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