Electoral or marital, a bond is a bond

The stories that electoral bonds tell us are reminders that liberalisation has not altered the financial relationship between political parties and the corporate sector as much as was expected. In the licensing era, it was taken for granted that corporate houses had to fund parties that might come to power if they hoped to remain in business. It was assumed that once the licence raj was over, this compulsion would disappear. Then, corporate support for political parties would be primarily a matter of ideology and personal preference. More than three decades after liberalisation, there is little to suggest that this has happened.A knee-jerk reaction to this reality is to assume that the controls have not really disappeared. Industries still require several clearances from govt, which could be weaponised. Even policies as well-intentioned as environmental clearances could reflect favour when they are given to projects that clearly destroy the environment, or disfavour when they are deliberately delayed. But this is not the entire story. There are aspects of the liberalised economy that require a favourable govt. Liberalisation in India has largely taken place in an environment of globalisation. The stock market has been boosted by foreign institutional investment. This investment has also played a role in the market value of individual companies, and hence their ability to raise capital. At the same time companies have sought foreign direct investment. Govt and companies have sought to benefit from the hypermobility of capital that drives globalisation.This ability of corporate houses to attract capital is enhanced when they are a part of global supply chains. These supply chains operate within circuits that link command-and-control centres with resource-generating centres. While there is the odd circuit where India can be the location of a command-and-control centre, notably the cricket circuit, most Indian industries are in the position of resource providers. The resources that are provided can range from basic raw materials to highly skilled technical manpower. Providing resources to global supply chains, especially technical services, can be a very competitive business. Many of these companies need to present an image of functioning at the higher end of the global business environment. This requires infra that is comparable to what is available in the West. In a situation of resource constraints, the focus of most corporates is on infra that is relevant to them, especially when they woo foreign investors. Emphasis is thus on all that a foreign visitor would see, from airports to expressways to the campuses of individual firms.Creating this infra requires govt initiatives in multiple areas. While there has been an increase in private investment in infra projects after liberalisation, govt remains a major investor in this domain. More than financial investment, it is govt alone that can take over land for infra development. Industries would like to influence which infra projects are prioritised. Individual houses would like infra that benefits their operations, whether it is in the midst of an economically established area in a city or a relatively remote production centre. They may even hope to get some direct benefit from govt ability to acquire land. The influence that corporate houses seek extends beyond direct material benefits. Global investment decisions have a prominent place for cities in which economic activities are to be located. Cities can gain an economic image of their own. The term Bangalored was once used to describe a worker’s job being exported out of the West. Corporate houses would like to develop positive images of the cities they are associated with. This is a task that cannot be done without govt resources. Corporate houses have tried, with varying degrees of success, to use public private partnerships to influence how Indian cities come to be seen globally. In their search for tangible, and less tangible, benefits from govt, corporate houses would prefer political parties that they believe are strong enough to take the decisions they would like. Some of these decisions, like creating global infra in a country that is still not doing very well on social indicators, would require highly centralised govts that would brook little dissidence. This lends itself to a preference for govts led by strongmen or similarly inclined women. Corporate preference for parties that promise strong centralised govts is a double-edged sword. While it works very well for corporate houses when it is used in their favour, the danger remains that it can quite easily be turned against them. An all-powerful govt that cannot be questioned would be tempted to intervene in competition between firms. It may also seek to curtail the autonomy of firms, maybe going so far as to influence how companies carry out their corporate social responsibility. The nature of the post-liberalisation economy has thus thrown corporate houses and political parties into a traditional Indian marriage where divorce is not an option even when there is considerable pain. As in these marriages there is a corporate preference for an alpha male political leadership even if that means paying out regular tranches of dowry whenever an election comes along.