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The world of lobbyists

Last updated: 09 December, 2011
Devinder Sharma 23:52 IST

BEHIND THE SCENES

The top 10 MNC retail companies eyeing the Indian market have reportedly sunk in several hundred crores of rupees.

The storm over the entry of big retail seems to have blown over for the time being. As the dust settles down, and parliament returns to its normal chores, the battleground shifts to the media. Suddenly newspapers are flooded with articles and interviews that decry the political ‘blackmail’ putting the controversial decision on hold. Screaming headlines and full page reports somehow gives an impression as if holding back the approval for FDI in retail is the ‘greatest blunder’ since Independence. India Inc. expresses its ‘displeasure’ calling it a set back for economic growth.

Well, hold your breath. The orchestrated media campaign, which may only be visible to a discerning eye, is actually the handiwork of what is called the corporate lobbyists. Sharp, aggressive and of course always carrying bags of money, they move in the corridors of power. They hobnob with ministers, politicians, economists, and media personalities, ‘educating’ them for instance on how and why India needs to invite big retail to tide over its unemployment and agrarian crisis. They plan diplomatic evenings, organise industry conclaves and summits, plan seminars and conferences, and also demarcate media strategies.

In the United States, corporate lobbying is legalised. In India, it operates undercover and under different names. But both perform the same job – influencing public policy and crucial economic decisions – and in turn undermine democracy. Crucial decisions in agribusiness, fertiliser, seed, farm machinery, animal husbandry, dairy, energy, science and technology, and retail – areas that affect country’s food security – are also influenced by corporate lobbying. Crores of rupees have been spent over the past few years by some of the big multinational corporations to seek an entry into India. What may appear to be economic decisions taken by the government often turn out to be the result of intense lobbying by foreign companies.

It is much worse in America. According to Transparency International, an average of Rs 1,234-crore are spent by US corporations for lobbying activities every month. In case you missed it, I said every month. Such heavy investment brings them rich returns.

Researching the US database for lobbying, and scanning the lobbying disclosure statements that the companies have made before the US Senate, I find almost each of the top 100 fortune companies investing heavily in lobbying, and this includes even IT giants like Intel, Yahoo, Google, Facebook, Microsoft and IBM. Agribusiness, pharmaceuticals, energy, aviation companies are on the top. Indian companies too are employing lobbyists for entering into America.

Cost-benefit analysis

To the question how does lobbying benefit the companies? The answer is provided by a research study conduced by University of Kansas. It pertains to tax concessions wrested by corporations. The report works out the cost-benefit analysis of lobbying expenditure, and interestingly concludes that 93 major corporations, including Hewlett-Packard, IBM, Pfizer among others, had spent Rs 1,456 crore on lobbying, which eventually won them tax breaks to the tune of a whopping Rs 3.2 lakh crore. At such a high rate of return, companies realise the importance of lobbyists.

No wonder, currently around 15,000Brussels-based lobbyists (consultants, lawyers, associations, corporations, NGOs etc.) seek to influence the European Union’s legislative process. Wikipedia reports that some 2,600 special interest groups have permanent offices in Brussels.In America, lobbyists mainly target the US Senate, US House of Representative and the State legislatures. In 2011, there were 12,220 lobbyists registered.

This clearly tells us how corporate lobbying is writing the economic policies of the American and European governments. The economic decisions are in reality not based on what the people require, but how much the business houses can invest in influencing policy decisions.

Compared to this, Rs 52 crore that Wal-Mart acknowledged to have spent in India between 2007 and 2009 appear peanuts. But collectively the top 10 multinational retail companies eyeing the Indian market have reportedly sunk in several hundred crores in the past few years. According to media reports, the coffee shop giant Starbucks, had also been lobbying in India seeking 100 per cent FDI in single brand retail. As per a disclosure statement it made before the American Senate, the company had spent more than Rs 1 crore in the first 6 months of 2011 for ‘market opening initiatives in India.’

Not only Wal-Mart and Starbucks, a number of foreign companies are lobbying hard to find a foot-hold in the Indian market. These include financial services major Morgan Stanley, New York Life Insurance and Prudential Financial. The financial services companies have already gained with the approval granted to 100 per cent FDI in single-brand retail. In addition, technology companies Intel, chemical giant Dow Chemical, pharmaceutical major Pfizer, telecom companies AT&T, Alcatel-Lucent are also engaged in intense lobbying.

There are a number of other furniture brands like Ikea and garment retailers like GAP which would benefit from the decision to open up for single-brand retail.

In other words, crores of rupees are being spent by foreign companies to influence public policy and the decision making process. Not many of us realise that the debate we see on the television or the articles we see in support of the foreign companies are often supported with lobbying money. In fact, lobbying is also influencing academic research, which is a very sophisticated way of influencing public policies.

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