Advertisement

  • News
  • Columns
  • Interviews
  • BW Communities
  • BW TV
  • Subscribe to Print
BW Businessworld

Prohibition Has Never Worked

Photo Credit :

In 1958, the Planning Commission in its second five-year-plan put forward a few suggestions for banning liquor across the country. It was the same suggestions that the Kerala chief minister Oommen Chandy announced a couple of days back to make Kerala a liquor prohibited state within the next ten years --- increase the number of Dry Days, reduce alcohol content in liquor and cut down the number of outlets. As Kerala prepares to march towards prohibition, it has obviously not learnt from precedence and history.

One fourth of the geographies in independent India were under prohibition in the early 50s. This included Madras Province and Bombay State (including Gujarat). In the late 50s, the ban spread to Andhra Pradesh, Madhya Pradesh, Assam, Odisha, Karnataka and parts of Kerala and it continued for nearly 10 years. The crescendo built up with the Lok Sabha passing  the Liquor Prohibition Bill on March 31, 1956.

By the mid 60s, these states one by one reversed their decision citing huge revenue losses. Since liquor trade has been mentioned in the constitution under the State List, the central government remained a spectator in enforcing the ban. The center had even offered to share 50 per cent of the losses with the states. But it didn’t work out because 10 per cent of most of states’ revenues come from excise and sales duty of liquor--- For Punjab, liquor accounted for as much as one-third of the revenue.

Today, three states--- Gujarat, Mizoram and Nagaland--- are continuing with the liquor ban. In Gujarat, non-resident Indians and overseas nationals are allowed to buy liquor using the permits issued by the government. Maharashtra has a permit system for limiting the consumption, but it is not effective.

One of the worst phases of liquor-ban was seen in Haryana in 1996, when the Haryana Vikas Party came to power. The state government had increased the bus fares, electricity charges and fuel sales taxes to bridge the financial deficit. The tourism industry had crashed; hooch tragedies became rampant; and spurious liquor cases piled up during the time. After 19 months, the state withdrew the ban.

In Andhra Pradesh NT Rama Rao’s ministry banned liquor in 1994, but his son-in-law Chandrababu Naidu reversed the decision when he came to power. Liquor trafficking from other states and crimes around it were being cited the reason for revoking the ban. In Tamil Nadu, Karunanidhi banned it and Jayalalithaa reversed it. Most politicians now admit that prohibition does not work. The states lose heavily on revenue, and the illegal hooch makers and distributors gain from the peoples' misery. Social and addictive habits are deep-rooted and it is near impossible to change them through legal bans. There is always someone who is willing to be a supplier at a price.

After taking legal advice, the Kerala government has started the process to close down the remaining 312 bars in the state. It plans to shut 10 per cent of the government-controlled outlets every year. The CM expects that the state will become liquor-free in 10 years. This will be a heavy price for deficit-burdened Kerala. Revenue from tourism and festivals will also be impacted, and the revenue deficit many be as large as Rs 10,000 crore.

More important, can the Oomen Chandy government turn the tide? History shows it is a tall order, and the Kerala government may ultimately have to eat humble pie.