To curb black money, legalise lobbying

It is laudable that the government of the day should commit itself to “bringing black money back” into the country. The issue is whether this intent will translate into a legislation meant for the purpose. A draft is already in the works.

Black money consists of factor incomes and property incomes which should have been reported to income tax authorities, but are not. Black money is generated through land transactions, encroachments on land, payment of bribe, misuse of public property, misappropriation of public funds and evasion of taxes.

Most black money in India is invested in real estate and share markets. It is difficult to arrive at the exact amount of illicit money moved into various banks and tax havens outside India, as has been shared by the Prime Minister in his man ki baat with the populace.

Unlike dealing with domestic black money, dealing with the issue of illegal wealth held by Indians in foreign banks and tax havens is more complex, as it involves a favourable response of the foreign countries, keeping in view international as well as laws specific to that particular country.

Legalising lobbying

Funding politicians and political parties is one among several methods adopted to convert black money into white money. Suppose a businessman funds a politician with his black money to contest in the elections. When these politicians get elected, they return the favour in the form of policies for the businessman which is known as “lobbying”. Finally the businessmen profits from their “investment”.

In the wake of the Niira Radia tapes scandal, and Walmart’s regulatory disclosure to US authorities of having engaged in lobbying activities, a private member bill, The Disclosure of Lobbying Activities (DLA) Bill, 2013, was introduced in Lok Sabha on March 8, 2013, by Kalikesh Narayan Singh Deo. The private member bill has at least presented a framework for regulating the lobbyists in the country.

The DLA Bill is a significant step, as for the first time in the history of Indian lawmaking a potential law recognises that lobbying is an integral part of democratic functioning. It remains to be seen however, whether such a bill ever be translated into law.

The DLA Bill requires the Centre to set up a central authority for registration of lobbyists, known as the Lobbyists’ Registration Authority (LRA). The bill, thus, deals with lobbying activity as an activity to be reported and disclosed from time to time. The DLA Bill covers lobbying activities intended to be undertaken by any entity, whether by itself or on behalf of others. It, therefore, covers independent lobbying agencies, India Inc, trade unions, non-profit groups as well as trade and business associations such as the Federation of Indian Chambers of Commerce and Industry (Ficci), which presently regularly represent their respective interests before the government.

The LRA is the administrative authority under the DLA Bill which empowers it to conduct investigations against persons it suspects of having engaged in lobbying activity without being registered with it.

With all the loopholes in the Bill, its passage (not in its original but a much more tightened and improvised form) may be an effective measure for the government that has expressed a strong will on the matter of black money. The DLA Bill is, itself, surely likely to be the subject matter of much lobbying (both for and against).

What about public perception? Indian masses are accustomed to hearing optimistic claims from governments in the past on this issue, with little favourable results to show for their promises. There is no evidence of excitement on their part this time around. For the last two decades “bringing black money back” remained a favourite slogan of many political parties to woo their electorate.

The cynicism apart, the country does not lack well-intentioned people. Those substantially involved in the black economy are no more than 3 per cent of the population. Hence, countering the black economy is feasible if the lobbying activities can be regulated urgently.

The writer is a civil servant, presently pursuing his PhD. The views are personal

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