How much control could the government exert in private sector entities?

How are India corporate companies exerting control over the government?

India is often hailed as the world's largest democracy, but how democratic is it really? In recent years, there has been a growing concern about the influence of corporate money and interests on the Indian political system. Corporate funding of political parties, candidates and campaigns has increased exponentially, raising questions about the accountability, transparency and fairness of the electoral process and policy making.

Corporate funding of political parties

One of the main ways that corporate companies exert control over the government is by financing political parties and candidates. According to a report by the Observer Research Foundation, corporate donations to political parties increased from Rs. 621.4 million in 2004-05 to Rs. 5.7 billion in 2014-15, a tenfold increase in ten years. The report also found that most of these donations were concentrated among a few large corporate groups and a few dominant political parties, creating a nexus between them.

Another mechanism of corporate funding of politics is the electoral bond scheme, introduced by the government in 2017. Electoral bonds are interest-free bearer instruments that can be purchased from any branch of the State Bank of India and donated anonymously to any political party. The parties have to redeem them within 15 days and are not required to disclose the identity of the donors. According to the latest report by the Association for Democratic Reforms, recognized national political parties redeemed electoral bonds worth Rs. 62 billion in 2017-18 and 2019-20, out of which 67.98 percent (around Rs. 42 billion) went to the ruling Bharatiya Janata Party (BJP). The report also revealed that 92.3 percent of the bonds were redeemed in the denomination of ten million rupees, indicating that they were mostly purchased by corporate entities.

Critics of the electoral bond scheme argue that it violates the principles of transparency and accountability in political funding and enables corporate capture of democracy. They claim that the scheme allows corporate donors to influence policy decisions in their favor without public scrutiny or oversight. They also point out that the scheme undermines the role of the Election Commission of India, which is supposed to regulate and monitor political finance.

Corporate influence on policy making

Another way that corporate companies exert control over the government is by influencing policy making through lobbying, advocacy and networking. Corporate lobbyists and representatives often interact with politicians, bureaucrats and regulators to shape policies and laws that affect their interests. They also use various platforms such as media, think tanks, civil society organizations and academic institutions to disseminate their views and agendas.

Some examples of corporate influence on policy making in India are:

- The introduction of the Goods and Services Tax (GST) in 2017, which was widely seen as a pro-business reform that simplified and harmonized the indirect tax system in India. The GST was supported by many corporate associations and chambers of commerce, who lobbied for its implementation for years.

- The amendment of the land acquisition law in 2015, which sought to ease the process of acquiring land for industrial and infrastructure projects by diluting some of the safeguards for farmers and affected communities. The amendment was pushed by several corporate groups and industry bodies, who argued that the existing law was too cumbersome and hindered development.

- The relaxation of environmental regulations and clearance procedures for various sectors such as mining, coal, power, highways and railways. The government has claimed that these measures are necessary to boost economic growth and attract investment, while environmental activists and experts have warned that they pose serious threats to the environment and public health.

Corporate influence on public opinion

A third way that corporate companies exert control over the government is by influencing public opinion through media ownership, advertising and propaganda. Corporate media houses often have close ties with political parties and leaders, and tend to promote their agendas and narratives. Corporate advertisers also have a significant sway over media content and editorial policies, as they can withdraw or withhold their sponsorship if they are unhappy with the coverage or criticism of their products or services.

Additionally, corporate companies use various forms of propaganda such as social media campaigns, fake news, paid news, sponsored content and public relations to manipulate public perception and opinion on various issues. They also employ trolls, bots and influencers to spread misinformation, discredit dissenting voices and create echo chambers.

Some examples of corporate influence on public opinion in India are:

- The promotion of the concept of "New India" by the government and its supporters, which portrays India as a rising global power and a leader in various fields such as technology, innovation, defense and space. The concept is often used to justify and celebrate various policies and actions of the government, such as demonetization, surgical strikes, digital India, Make in India, etc. The concept is also endorsed by many corporate leaders and celebrities, who project a positive and optimistic image of India to the world.

- The demonization of the farmers' protests by the government and its allies, which have been going on since November 2020 against three controversial farm laws that are seen as favoring corporate interests over farmers' rights. The protests have been met with a barrage of propaganda and misinformation from various sources, such as mainstream media, social media, government spokespersons and pro-government celebrities. The protesters have been labeled as anti-national, anti-development, anti-modi, Khalistani, Maoist, etc., and their demands have been dismissed as unreasonable and uninformed.

- The glorification of the Adani and Ambani groups by the government and its supporters, which are two of the largest and most influential corporate conglomerates in India. The groups have been praised for their achievements and contributions to various sectors such as energy, infrastructure, telecom, retail, etc. They have also been granted various concessions and benefits by the government, such as tax breaks, land allotments, contracts, licenses, etc. The groups have also been accused of crony capitalism, corruption, environmental violations, human rights abuses, etc., by various critics and activists.

Conclusion

Corporate companies are exerting control over the government in India in various ways, such as funding political parties and candidates, influencing policy making and shaping public opinion. These practices pose serious challenges to the democratic functioning and values of India, such as transparency, accountability, fairness, equality and participation. They also undermine the interests and rights of the common people, especially the marginalized and vulnerable sections of society. Therefore, there is an urgent need to reform and regulate the corporate-political nexus in India and restore the balance of power between different stakeholders in democracy.

Source: 

(1) Corporate Governance in India – Practices, Framework | Deloitte India. https://www2.deloitte.com/in/en/pages/risk/articles/governance-101.html.

(2) Discuss various controls over the working of Public corporations in India. https://www.lawyersnjurists.com/article/discuss-various-controls-over-the-working-of-public-corporations-in-india/.

(3) The corporate-government nexus in Indian politics: An analysis of .... https://www.thepolisproject.com/read/the-corporate-government-nexus-in-indian-politics-an-analysis-of-corporate-backed-electoral-trusts/.

(4) Unmaking Democracy: How Corporate Influence Is Eroding Democratic .... https://hir.harvard.edu/unmaking-democracy-how-corporate-influence-is-eroding-democratic-governance/.

(5) Corporate Funding In Indian Political Structure: A risk to Indian Democracy. https://www.legalserviceindia.com/legal/article-3889-corporate-funding-in-indian-political-structure-a-risk-to-indian-democracy.html.

FAQ's

Who controls the business in India?

The Imports and Experts (Control) Act, 1947 amended from time to time empowers the government to prohibit or control imports and exports in the public interest.

How does the government control the activities of the private companies?

The regulatory role of the government involves formulating and implementing various direct and indirect measures to monitor and regulate the economic activities of the private sector.

Who controls private companies in India?

The Ministry of Corporate Affairs is the governing body which regulates all Private Limited Companies in India.

Can a private company be a government company?

A government company can both be a public company or a private company. Since the requirement of a public company is a minimum of two members, one member can be the President or the Governor and the other can be an officer of the government.