Saturday, September 15, 2012

India # 6: Dark beer and crony capitalism


Finding a dark beer in a city of eight million shouldn’t be all that hard, should it?  After all in my hometown, where half the population doesn’t drink, two companies make their own dark beer, as well as various other shades.  Boise has at least seven and one little place near my home offers 250 beers, many on tap.

But go into any restaurant or bar in Bangalore and you have one choice on tap:  Kingfisher, an uninteresting lager.  It’s like the John Belushi skit on Saturday Night Live long ago.  Whatever you asked for at his lunch counter he was only serving “Cheeseburga, Cheeseburga!” 

 Vijay Mallay, owner of Kingfisher, has a monopoly on tap beer in India and also distributes Heinekens.  Indians drink just one-twentieth of the beer Americans consume per-capita but what they do drink is controlled 57 percent by this one man. 

When I complained about this to my ACCION host he said Mallay not only has a monopoly on tap beer conferred by state and federal governments but squelches any quality startup opponent.  Not far from my host's old neighborhood there popped up a single bar called “Bierre” which, upon his inquiry, would soon be producing its own dark beer.  However Mallay stepped in and Bierre opened only after it had given Kingfisher an ownership share in this one little place, he said. 

Kingfisher supports a government requirement that beer not be exported across the lines of its 28 states, meaning every company must build 28 separate breweries.  Expensive? Yes.  But not as expensive as competition.

(I just got back from Bierre.  They were out of stout but had an excellent English bitter which I drank during a replay of Serena’s excellent victory at the Open.)

When it comes to booze and government, the story gets worse.  Indian law forbids consuming alcohol without a permit (consistent with this being a Hindu and Islamic country) which you must obtain from a doctor and then pay $l00 a year.  Or for $1,000 and a physician’s letter--saying alcohol is vital to your health—you can get a lifetime permit.

This is completely unenforceable, of course, but offers a constant threat the police can use.  It is just one of many restrictions people face.  In “Maximum City,” a superb book on modern Mumbai by Suketu Mehta, India is defined as “The Country of No.”  You want a gas connection?  No. A phone? No.  Want your daughter to go to St. Catherine’s?  You don’t know the right people.  A parking space?  Apply to the committee.  And so on--at least in Mumbai.

We think the United States has lapsed into crony capitalism where, for example, money turns an obscure section of the tax code into one company’s bonanza, as indeed it has. But India is way ahead of us here.  For example, the electricity blackout that hit 640 million Indians last month has triggered what the Indian press is calling “Coalgate,” a scandal, not a toothpaste, in which the ruling party gave to its friends the right to mine coal and many of them then sat on the concessions.  No coal = no electricity.

India is widely perceived as having neglected the infrastructure essential to a modern economy.  State-controlled is one reason; another is that India is composed of 28 states which wrangle and beggar their neighbors. Its notorious bureaucracy is a third.  A fourth is corruption and a fifth the outsourcing of nation building to one’s friends, family and supporters. 

The writer William Dalrymple in "The Age of Kali" wonders how different India would be today if its first premier, Jawaharlal Nehru, had not been educated in England during the heyday of Fabian Socialists.  India became the world’s largest experiment in socialism, with its major industries controlled by government, only recently relaxed somewhat.  Making alcohol is hardly nation building, I have to agree, but the absence of dark beer is a trivial reminder of what crony capitalism looks or tastes like:   all Cheesburga, Cheeseburga! all the time. 

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