[Polity] Lobbying: Meaning, pro-anti arguments, Nira Radia, Gulam Nabi Fai, Wal-mart

polity87 Comments

  1. Introduction to terms related Lobbying
  2. Why is it called Lobbying?
  3. How is lobbying done?
  4. Lobbying in USA
  5. Lobbying in India
  6. Lobbying vs Bribery
  7. Controversies related to Lobbying
  8. #1: RadiaGATE
  9. #2: Gulam Nabi Fai: Anti-Kashmir lobbying in USA
  10. #3: Wal-Mart Lobbying: FDI in Multibrand Retail
  11. Lobbying: Pro arguments
  12. Lobbying: Anti-Arguments
  13. Mock Questions

Introduction

Lobbyist?

  • Lobbyist is a person employed to persuade legislature/executive to make some policy/act/rule that favors the lobbyist’s employer.

Employers of Lobbyist?

  • Lobbyists are hired by Interest groups e.g. businessmen, spy agencies (ISI/CIA), etc.
  • Trade unions, environmental associations,  NGOs, women’s rights group etc. also demand Government to make particular policy/act/rule via dharna-pradarshan, strikes, bandh, fasts, protests, rastaa-roko etc. But they’re interest groups. They’re not lobbyist.
  • Lobbyist is a sophisticated professional who does this work for money. (And they’re usually very expensive to hire.)

Aim of Lobbying?

  • To get a favorable Government  policy/rule/law etc. OR
  • To eliminate / modify unfavorable Government policy/rule/law etc.

Target of lobbyist

  • Members of parliament, politicians, ministers, bureaucrats, regulatory agencies etc. (anyone who has power to make or modify some policy/act/rule).

Why is it called Lobbying?

  • In the early 19th centuary, many US Congressmen (=MPs of USA) and officials would gather and eat together at a particular hotel in Washington, D.C.
  • And People seeking to influence the government, waited for these members in the lobby of the hotel, and talking to them as they came in and out.
  • Thus the activity came to be known as “Lobbying”

How is lobbying done?

  • Lobbyist is a sophisticated professional. He provides briefing material, pamphlets, charts, presentations etc. to concerned legislators (MP, MLA, Senators) and executives (ministers high ranking bureaucrats).
  • He’d also run media campaigns, online campaigns etc. (he has connections everywhere.)
  • He arranges meetings, parties, seminars, conferences in some expensive 5 star hotels, golf-resorts. He invites journalists, intellectuals, politicians, bureaucrats etc. gives them free travel food and lodging.
  • Lobbying is legally allowed in EU, US, Australia, Canada, Israel, Italy. (list not exhaustive).

Lobbying in USA

  • As per the American laws, the companies are required to disclose the issues and expenditures associated with lobbying.
  • This helps public and media to who is paying how much for a particular cause.
  • + professional Lobbyists are required to register with the House of Representatives (=their lok sabha) and the Senate (=their Rajya Sabha).
  • Lobbying is so widespread in USA that in 2011 alone, there were 12000+ registered lobbyists, and more than 3 billion US Dollars were spent on lobbying! (This is not bribe, It is the cost of hiring lobbyists, Technical documents, research etc.)

Lobbying in India:

  • Lobbying is not “officially” recognized in India in any form (by Government or legislature).
  • There is no formal organization for regulating/ controlling/ overseeing/ supervising the act of lobbying.  (for example, newspapers have press council of India, banks have RBI…. but there no such regulatory body for lobbying).
  • Still, lobbying is (unofficially) done through Public Relations Firms and some well connected individuals (such as Nira Radia).
  • Often, big corporate houses hire retired bureaucrats, (or sons/daughters of high ranking bureaucrats/ ministers) as “liaison officers”.
  • Such liaison officers do the lobbying work.
  • The Planning Commission of India has set up an expert committee to look into the issue of lobbying.
  • Lobbying activities in India are primarily tested in terms of the existing law, i.e., the Prevention of Corruption Act, 1988. (In India, Lobbying has become synonymous with Bribe)

Lobbying vs Bribery

Lobbying

Bribery

  • Lobbyist will hold some seminar/conference for MLAs / Excise minister and officials of Gujarat State.
  • He will show powerpoint presentation on how state can earn more revenue from sale of liquor and use that money for health and education etc.
  • But in reality this guy is paid by Kingfisher, McDonalds, Bagpiper or some other prominent liquor company.
  • Same person is carrying a box full of desi-liquor bottles in his car, inside Gujarat.
  • He is caught by police and gets away by offering some cash + a few bottles to those policemen!

How is lobbying different from bribery

  1. A briber wants to circumvent the law. A lobbyist wants to change it.
  2. As Laws affect everyone, lobbying is supposedly more legitimate than bribing, as lobbyist is not asking for any special treatment like a briber.
  3. The power of the lobbyist is arguably far greater than the power of the briber.
  4. Broadly speaking, Lobbying is the preferred means for exerting political influence in developed countries and corruption the preferred one in developing countries.

Controversies related to Lobbying:

#1: RadiaGATE

Before that, let’s understand what is “-gate”, for example Radia-gate, coal-gate and other scams. Why are they given the “-gate” suffix”?
For that, we’ve to understand the origin and meaning of the word “Watergate scandal”

What is Watergate scandal?

  • In USA there are two political parties: Democrats and republicans.
  • 1972: President Nixon (Republican party), orders his men to break into the office of Democratic party and install spy devices. (so Republican President Nixon can monitor the conservations, activities, plans and election strategies of Democratic party.
  • This office was located in a building known as “Watergate”.
  • So when the whole scandal broke out, it was called “Watergate” scandal, and President Nixon had to resign because of this Watergate scandal.
  • Taking that analogy, Indian media give “-gate” suffixes to scandals for example Radia-gate, Coal-gate.

Who is Nira Radia?

Lobbying Nira Radia

  • She is a political Lobbyist and an acquaintance of (infinitely Awesome) A.Raja.
  • Nira Radia used to run a public relations firm whose clients include big names like the Tata Teleservices and Mukesh Ambani’s Reliance Industries.

What is the controversy?

  • Nira Radia lobbied to get A Raja to be appointed as Telecom Minister.
  • Income Tax department tapped Radia’s phone lines for 300 days in 2008–2009 as part of their investigations into possible money laundering, tax evasion etc.These recordings are known as Radia Tape.In 2010-end, OPEN magazine showed some of the telephone conversations of Nira Radia with senior journalists (Barkha Dutt, Veer Singhvi), politicians, and corporate houses.
  • According to these phone conversations, Radia lobbied against the reappointment of Dayanidhi Maran.
  • She attempted to use some media persons (Barkha Dutta) to influence the decision to appoint A. Raja as telecom minister.

#2: Gulam Nabi Fai: Anti-Kashmir lobbying in USA

  • Ghulam Nabi Fai used to lobby for Kashmiri cause in USA.
  • He’d hold conference and seminars of Pakistani and Indian intellectuals, discussing the “future” of Kashmir. After the seminar, he’d show documents/resolutions/minutes of such seminars/conferences to US lawmakers and ask them to show support for “Kashmiri cause”. i.e. Kashmir should be given “freedom” from India.
  • He had received millions of dollars from ISI to carry out this activity.
  • But He hid this money detail from the tax authorities of USA.
  • He was arrested and given 2 years’ jail time.
  • Many of the Jholachhap NGOs and intellectuals of India were also part of his wining-dining-debating circuit.
  • US Attorney told the court that some of ^these activists had links with the ISI and that chairman of the Hurriyat Conference, Mirwaiz Umar Farooq, was “supported and controlled by the ISI.”

#3: Wal-Mart Lobbying: FDI in Multibrand Retail

  • Walmart = big player of Multibrand retail.
  • Recall that, as per the US Lobbying law, company has to disclose how much money did it spent on lobbying.
  • Accordingly, WalMart disclosed that it had spent $25 million (about Rs 125 crore) since 2008 for various lobbying activities, including for gaining access to Indian markets.
  • In India, Opposition parties created uproar in parliament regarding this. They wanted the names of ministers/officials in India who got this money.
  • Govt. said they’d initiate a time-bound inquiry by a retired judge into reports of lobbying by Walmart.
  • What is the problem then? In India as we know, Lobbying is not regularized, It is alleged that this 120 crores was used to bribe Indian legislatures & Executive through its Indian arm (Bharti).

Wal-Mart’s defense

  1. As per US law, we had to file lobbying Expenditure report with the US Senate. But report doesn’t say that entire 125 crores have been spent exclusively in India.
  2. Lobbying is totally legal in USA, so even if some Indians may find it distasteful or unethical, we’ve committed nothing wrong!

Lobbying: Pro arguments

  1. Lobbying makes sure that minority interests are fairly defended against the tyranny of the majority. For example, a medical association, or a trade association of health insurance companies, may lobby to counteract the influence of tobacco companies (while tobacco companies have more money, provide employed to lot many people.)
  2. There is nothing wrong in lobbying, so long as no bribe is involved.
  3. Lobbying is a legitimate practice around the world.
  4. Lobbyists provide high quality intelligence (Research work) for formulating policies.
  5. If lobbying is legalized in India, it’ll bring more transparency in the functioning of Government and parliament. (atleast we’ll know who paid the money to get particular law/rule to be passed?).
  6. In the corporate world – Sales pitch, advertisements, marketing, public relations, and roadshows before IPOs, are all legitimate corporate activities. These activities are akin to lobbying.

Lobbying: Anti-Arguments

  1. Lobbying is an aggressive and intense form of persuasion. (Not a dialogue.)
  2. Lobbying is simply a case of government going to the highest bidder.
  3. A powerful lobbyist can get laws changed even if there’s no public consensus to do so, and those laws still apply to everyone. The opening up of the multi-brand retail sector in India to foreign investment is one example.
  4. Against Right to Equality: Businessmen with extensive money power can indulge in lobbying and get things done. While common man has to wait for hours or days to meet his MP/MLA.  Thus, those with (financial) resources will win and those without cash will lose.
  5. Our country does not have requisite safeguards for accountability in such lobbying cases. So if Lobbying is legalized in India, It’ll lead to more 2Gs, and more Radiagates.

Mock Questions

  1. Should we legalize lobbying in India? Yes/No why?
  2. With reference to Gulam Nabi Fai case, should Indian Government also hire this type of lobbyists in US/EU on the issues of Kashmir, China-border etc.?
  3. For a moment, let’s assume that FDI in Multibrand retail is in best interest of farmers and common men of India. And Wal-Mart and other companies paid lot of money in lobbying to get this approved. Is it good or is it bad? Does the end justify the means?

Ref

  1. Major Inputs from Mr.Palas Nuwal.
  2. http://www.indianexpress.com/news/when-lobbying-is-legal/1048686/0
  3. http://www.sparknotes.com/us-government-and-politics/american-government/interest-groups/section3.rhtml
  4. http://www.thehindubusinessline.com/opinion/lobbying-needs-strong-regulation/article4206711.ece
  5. http://indialawjournal.com/volume4/issue_3/article_by_diljeet_titus.html
  6. http://zeenews.india.com/exclusive/the-lobby-against-lobbying_5940.html

Mrunal recommends

  1. (free) NCERT, NIOS, TN-Books
  2. Environment by ShankarIAS
  3. Indian Polity M.Laxmikanth (Hindi | English)
  4. Art & Culture by Nitin Singhania (Hindi | English)
  5. Spectrum: Modern History (Hindi | English)
  6. Bipin Chandra: Post Independence
  7. Fast-track to Arithmetic Rajesh Verma
  8. MK Pandey’s Analytical Reasoning
  9. Disha’s Topicwise Paperset (Hindi | English)
  10. School Atlas
  11. Mains: Language papers
  1. (free) NCERT, NIOS, TN-Books 4 History,Geo,Sci
  2. Indian Polity M.Laxmikanth (Hindi | English)
  3. Spectrum: Modern History (Hindi | English)
  4. Maths: Quantam CAT Sarvesh Kumar
  5. Objective General English SP Bakshi
  6. Word Power made Easy -Norman Lowe
  7. Topic wise Solved Paperset by Disha


So far 87 Comments posted

  1. ALOK KC

    sir,im a BE graduate,i didn had KANNADA language in BE.I have taken KANNADA lit as optional,so can i continue with this as optional this time?

    1. Suman Kumar

      No Sir, you cannot take Kannada Lit as an optional now.

  2. UPSC

    Respected Mrunal Sir,

    Please help with the civil services-2013 Mains General studies papers II,III,IV,V.

    Please show us the way.

  3. sai

    hi Mrunal,

    Nira Radia lobbyied for getting A.Raja elected as Telecom minister. How can we call this activity as lobbying.

    She didn’t act for any company or any firm, nor did she lobby for some law/policy/rule. I guess this kind of “lobbying” is not justified. it is easily understandable that if she has lobbyied for some favourable person getting elected as telecom minister, it is obvious that they are in the verge of some “awsome” scam

    1. manu

      Where is your institute?

  4. Lucky

    Sir I have two questions, please tell:
    If an Apple smartphone is made in china, then will it add to China’s export or USA’s where the company is registered?
    And my second question is :It is said that FDI and FII are needed for our foreign reserves. FDI once brings money in India, but after then forever, the foreign company earns from us and takes money outside India . Doesn’t draining of wealth occur ?
    Thanks

    1. mr einstein

      1. if an apple smartphone is made in china, then it will add to china’s exports.. In other words,it will add to china’s GDP, but also it will add to America’s GNP (gross national product)…

      2. FDI and FII are much needed for our foreign reserves.. they bring huge sums of foreign currency, adds to our GDP, brings about intl standards in various services, economic growth, provides employment, and pay taxes to our govt. And in economics, these investments are long term and do not stop at once. So the flow of currency to our country will keep going on for a reasonable amount of time. During this course of time, indian companies will also invest abroad, and hence it will most probably get neutralised.. so FDI and FII are good source of foreign reserves since they bring huge investments and growth oppurtunity in our country…
      (( also most of the indian retail shopkeepers dont pay taxes to the govt., therefore fdi in retail will provide huge sums of money to the govt in the form of taxes, and hopefully would reduce black marketing and corruption..)

      thanx 🙂

  5. M Prakash

    When India opens for FDI in retail…like wal-mart coming in…It can only gain profits in india, if indian consumers interest are protected ….though it is the largest retailer in the world…As few years back…wal mart also entered into some of the european markets….thr it could not make huge profits and was neutral because of the competition from the local business.

  6. Nitin Pathak

    Hi Mrunal Sir,
    In the context(background) of the changed UPSC pattern(Mains),Please suggest necessary additions(deletions if any) in the TO READ PART and the references(materials) to go through..ex.Ethics part,World History part,Social issues(broader) etc.
    Thanks as always Sir!!!!!

  7. moron

    What is with this guy and desi liquor?!! 😀

    1. Rahul

      He’s a guy from Gujarath where there is prohibition. 😀

  8. Aiman Reyaz

    I am sure Mrunal is busy in preparing the book list of the reformed syllabus, because of huge demand. If he is not then please do it. We all are eagerly desiring it. Thanking you,Mrunal, in advance. By the way Nitin Pathak, for WOrld history you must focus on Jain and Mathur. for ethics and all i don’t know. anyways i want Mrunal to tell all of us, in his eccentric style about the book list.

  9. dr akanksha

    sir plz give sm inputs about the changed pattern

  10. PREM PRAKASH

    frnz, syllabus ll be same for 2013. there ll be no changes this year pattern ll be as same as earlier.

  11. manu

    Whether u have any institute

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