Nitish Growth Model: Lure Investors & Hit Them On The Head ‘With A Bottle’

The unease of doing business in India has frustrated the Chief Executive Officer (CEO) of the India unit of the German brewing company, Carlsberg.

CEO Michael Jensen says that India is the most difficult market in the world. “But you can’t do stuff like that,” the Economic Times quoted him saying today about Bihar’s decision to introduce prohibition. “It is very detrimental to investor confidence,” he added.

Doing business in India is never easy and Jensen knows. So, what got his goat?

The ET report tells us that the Carlsberg India CEO was lured by Bihar Chief Minister Nitish Kumar to set up shop in his state three years ago. Jensen got swayed by the promise of Bihar’s vikas purush and he obliged.

What makes Bihar attractive for investment in this domain is the abundance of raw materials like barley and wheat and the availability of cheap labour.

Now, he regrets his decision. “It was a sizable market and investment but they decided to do prohibition in 12 hours,” says Jensen.

Jensen’s ‘12 hours’ claim is obviously an exaggeration. A statewide ban on consumption of liquor was one of the major poll promises of Nitish in the run up to the Bihar assembly elections. The women’s vote might have been in his mind when he decided to champion the cause of prohibition.

Now, what explains Jensen’s grief is that he probably did not expect a politician to deliver on his promise so fast. Or go back on one too - the promise to give Carlsberg a good place to manufacture its booze.

However, a ban on booze was one of Kumar’s first acts after winning the Bihar assembly elections last year. His government prohibited country liquor and decided to bring down the number of shops selling alcohol from 4,000 to 700. The prohibition act by the assembly has draconian provisions. It allows action against all adult members of a family if any member is found in possession of liquor. An entire village can also be fined! Every household of Kailashpuri village in Nalanda district was fined Rs 5,000 as a collective penalty for violating the prohibition law after some liquor bottles were found.

Jensen is not alone. Many of his peers are also feeling the heat. Many are seriously considering exiting the state. Many others have knocked on the doors of courts, claiming crores in compensation.

Meanwhile, the newspapers are inundated with scores of reports telling us so and so number have died after consuming spurious liquor.

No state has succeeded in implementing prohibition properly. Nitish is swimming against the tide of history. He is also destroying the business climate in the state with his stubbornness.