No action Modi: Crony capitalism, beedi style
Lobbyists have probably got what they wanted. More than 15 days have passed since Prime Minister Narendra Modi’s reported endorsement of displaying bigger warnings on tobacco products. Yet, no final decision has been reached upon increasing the size of the cancer warning on tobacco products. The BJP MP and beedi manufacturer has also not been removed from the parliamentary standing committee, which was constituted to frame laws on the tobacco industry. This doesn’t demonstrate a slow-moving government but showcases high-handedness of lobbying groups.
In a first of its kind event a parliamentary committee ostensibly lobbied in favour of an infamous industry like tobacco. But the most surprising and appalling development was that the government yielded before pro-tobacco voices in the committee and refrained from having more effective warning on tobacco products going against the global norms. Now that the government has surrendered on lobbyists’ demand to not expand the warning display on cigarette packets, it only ensures that no major regulation on tobacco sales is likely in the near future.
The tobacco episode is more shocking than the recent cases of private company executives accessing government files, as it shows how promoters of companies are making laws for themselves. If overt campaigning like this is possible in favour of tobacco, which is an internationally certified carcinogenic substance, then we have a far greater reason to be concerned about policies regarding other industries.
The political-business nexus is no more a secret in India. But never has this come to the surface in such a brazen manner. It is unprecedented that tobacco lobbyists could dare to challenge the government’s policies exploiting a constitutional forum. In spite of this open manifestation of lobbying, it is still hard to authenticate this nexus in the country because political parties have never allowed setting up of high standards of political transparency and government-business relationship. A massive transfer of benefits between political leaders and businessmen can be perceived, though, but is difficult to quantify. However, the results have been astounding in the countries where they sought to measure this nexus.
America’s open data research, journalism and voluntary organisation Sunlight Foundation released a study last year, which was the most sensational exposé of the business-politician nexus in USA. This study showed that 200 of the top politically active American companies had spent $5.8 billion on political donation and lobbying (US law demands declaration of expense on lobbying) between 2007-2012. In return, they got benefits of worth $4.4 trillion from the government in the form of contracts and business opportunities. Sunlight Foundation worked for a year on it scanning nearly 14 million documents related to companies and electoral donations to come to the conclusion that the companies under investigation had invested 26 per cent of their expenses in politics. Sunlight Foundation christened it “fixed fortunes”.
An Indian brokerage firm Ambit Capital has made an index of 75 politically connected companies. This index has registered a consistent rise from 2009 to mid-2010 and beat the BSE Sensex 500. However, the index of politically connected companies sank to the bottom in October 2010, after CAG reports on various scams came to light. This index again soared from April 2014, when the prospects of BJP coming to the helm were becoming obvious.
In spite of Ambit-like efforts it is almost impossible to do a “Sunlight Foundation” in India. Neither can we track down the sources of donations to political parties, nor is it possible to audit the accounts of donor companies. But there is no denying that Indian corporates have their own version of thriving “fixed fortunes”.
It wasn’t unexpected that BJP let its beedi (crony) capitalist off after a slight admonishment on “clash of interests”. However, more surprising was the fact that a beedi manufacturer was roped in to formulate laws on his own industry at a time when anecdotes of PM Modi’s vigilance on ministers and MPs were abuzz.
Finance minister Arun Jaitley has rightly mentioned in his speech at Peterson Institute that the word “scandal” has ceased to be a part of public discourse in last few months. However, the silence of BJP’s senior leaders on the tobacco issue demonstrates that the government and party are finding it tough to stay away from the influence of scandalous lobbying despite having a PM prone to pontificating on transparency in public life.