Foreign lobbying got government moving on reforms, say experts

Lobby groups from abroad, particularly the US, and their partners in India played a role in prompting the government to go for the reforms announced, say experts

Not long back, the US Chamber of Commerce had claimed it influenced at least nine key Indian government policy decisions, including the rise in foreign direct investment (FDI) to 100 per cent in single-brand retail from the earlier 51 per cent. Lobby groups from abroad, particularly the US, and their partners in India played a role in prompting the government to go for a slew of reforms on Friday, experts said.

Rajiv Kumar of the Federation of Indian Chambers of Commerce and Industry said it was undeniable that international lobbies also had some pressure. He contested the hypothesis, though, that only their pressure worked. “It is very difficult to ascertain whose pressure is more, as even the Indian business community has been calling for reforms for a long time now,” he said.

Some also said the branding of the prime minister as an “Underachiever” by Time magazine or as a “tragic figure” by The Washington Post were part of a concerted campaign to create pressure on the Indian establishment to further liberalise markets here. The Washington Post has now said the reforms announced by the UPA government “are the biggest and arguably toughest economic reforms since Prime Minister Manmohan Singh took over in 2004”.

PRESSURE POINT

• The US Chamber of Commerce claimed at least nine key govt policy decisions, including FDI reforms, were influenced by it
• Analysts say that the branding of the prime minister as an "Underachiever" by Time magazine or as a "tragic figure" by the The Washington Post were part of the same concerted campaign
• The recently announced FDI policy has been now hailed by The Washington Post as "the biggest and arguably toughest economic reforms since Prime Minister Manmohan Singh took over in 2004"
• In May, US Secretary of State Hillary Clinton, who is also a former director of the global retail giant, Walmart, was on an India visit and met West Bengal Chief Minister Mamata Banerjee 
• FDI in multi-brand retail was among the items believed to be discussed by Clinton with Banerjee

On Friday, the Cabinet lifted the suspension of its earlier decision to open multi-brand retail to 51 per cent FDI, relaxed norms for 100 per cent FDI in single-brand retail and gave clarity to FDI in power trading exchanges, among a few other decisions.

These decisions were announced about 20 days before US Treasury Secretary Timothy Geithner is slated to visit India. In April this year, the then finance minister, Pranab Mukherjee, had met Geithner in Washington with the treasury secretary expressing industry concerns over the proposed retrospective amendments to the Income Tax Act. In May, US Secretary of State Hillary Clinton, who is also a former director of the global retail giant, Walmart, was on an India visit and met West Bengal Chief Minister Mamata Banerjee. FDI in multi-brand retail was among the items believed to be discussed.

Clinton also met Bharatiya Janata Party (BJP) leader Sushma Swaraj. Swaraj's party is vehemently opposed to FDI in multi-brand retail. Later in June, a delegation led by the American Chamber of Commerce met BJP president Nitin Gadkari to discuss reform measures. Representatives from Intel, Accenture, IBM, AT&T, Hewlett-Packard, Bank of America, Cargill, GE Transportation and Boeing India were among those present, as well as officials of the US embassy.

Ajay Singha, executive director of the American Chamber of Commerce in India, said India needed to fall in line with global developments. He said FDI in retail would bring in more efficiency. Pratap Bhanu Mehta of the Centre for Policy Research said, “Of course, lobbying happens. We do it. They also do it. In an interdependent world, all kinds of forces are active.” These are the obvious steps that could have been taken for reforms, he added.