Liquor Prohibition Policy: the Need for a National Policy

According to the national survey on the extent and pattern of substance use in India (2019), over 160 million people consume liquor and 29 million people are dependent on it. Additionally, 29 million people consume low-grade/hazardous liquor. And, more than 60% of liquor consumed in India contains spirit i.e., Indian Made Foreign Liquor (IMFL) and country-made liquor. Such a huge number poses a nationwide threat to public health and in turn our country’s overall development. Is there a need for a national-level policy on liquor prohibition? 

Mainly there are two schools of thought- those who advocate for the blanket  prohibition of liquor; and others who recommend the notion of individual choice in  liquor consumption but with certain reservations and checkpoints. 

Liquor prohibition means banning the manufacture, trade, storage, transportation,  sale, and consumption of liquor. Since liquor is a State Subject as per the seventh  schedule and article 42 of India’s constitution, states formulate and enact their policies on their own. Several states (Gujarat, Haryana, Manipur, Mizoram, Nagaland, Lakshadweep, Andhra Pradesh, Tamil Nadu, and Kerala) had earlier banned liquor but later on, repealed completely or partially in their respective states excluding Bihar. Additionally, there is non-uniformity in the legal minimum drinking age and taxes (excise and sales tax) across Indian states. The two states- Gujarat  and Bihar are a classic case of its inefficiency. Gujarat took the lead in 1949 citing the vision of Mahatma Gandhi on alcohol consumption. However, in 2017 it amended and gave easier passage for foreign tourists & visitors to get  liquor permits. The motive of each state behind this policy was to reduce crime, solve social problems, prevent road accidents, and improve the standard of living & health of citizens. Looking at its outcomes, it raises another key question- Does it solve the laid objectives? 

Economics of Liquor Prohibition 

Several economic research studies found that liquor consumption is price inelastic,  which means an increase in its price will lead to the increase in expense of liquor  consumers which further leads to the economic hardships of their  families/dependents. However, to that extent, it can have negative externalities  associated with it. The rate of participation in the usage of frequent liquor  consumption is quite elastic with respect to own price [Economic and Political  Weekly, (Nov. 4-10, 2000)]. Additionally, due to the enormous, cheap, and easy  availability of substitutes like methanol, marijuana, hooch, taadi (made from coconut  tree), tobacco, etc. affects price increase and ban of liquor negatively on health and  revenue of state both. 

The higher educational status of a family may also link to lower price elasticity of alcohol consumption because of future adverse effects of liquor consumption.

The other prime economic case of those states where liquor prohibition is not in  existence- these states earn 15-20% of their revenue only from the liquor sales tax while the states having a ban loses this king’s pie. However approximately half of the total liquor consumption falls under the unrecorded category as per the WHO Global  status report, 2018

Bihar as an Example 

Let’s take the classic example of Bihar and delve deeper to minutely understand its  social & economic implications before and after the liquor prohibition era. As per the Bihar Prohibition and Excise Act, 2016 government imposed a fine of Rs.  50,000 or three months of jail term for consumption and five years for trade or  manufacture of liquor for first-time offenders. 

The number of accidents due to drunk driving in Bihar in 2015 (pre-liquor prohibition  law) was 776 (National Crime Records Bureau, NCRB 2015) but in 2019, Bihar  reported “zero” road mishaps (Union Road transport ministry, 2020). In terms of  liquor consumption, 29% of Bihar’s population that used to consume alcohol  [National Family Health Survey (NFHS) 2015-16], has declined to 15.5% [NFHS  Report (2019-20)]. One of its key objectives showed a downward trend that in 2019  compared to 5 years ago, spousal violence dropped by 5% in five years [NFHS-5  Report 2020] and cases of Domestic Violence fell by 37% in 4 years in Bihar [NCRB  (2015-16-17-18-19) reports].  

But it created more harm than good. A parallel economy of illicit liquor trade is  flourishing in Bihar even as the state is losing out on revenue from alcohol sales.  Before the liquor ban in Bihar (2014 to 2015), Bihar made over Rs 3,100 crore from  the sale of liquor through excise duty (Economic Survey, 2016-17). Since then, the  state has been losing out on all potential revenue from alcohol sales. Additionally,  bootleggers are selling alcohol at a higher price, pushing the poor towards cheap  drugs and easily available substitutes. Over 3.5 lakh people have been arrested  under the stringent prohibition law since 2016 leading to crowded jails and clogged  courts. The police crackdown on prohibition violators has also affected the  marginalized sections of society disproportionately. The liquor policy was formulated  and implemented in such a fashion that has been harsher on users rather than  suppliers. Though there were massive unreported cases due to consumption of illicit  & spurious liquor in the state, 106 people have died due to hooch in 2021 itself  (Bihar Excise Department Report, 2021). There are no figures available with the  government on the total number of such deaths since April 2016. Moreover, it fails to  provide alternative livelihoods for vulnerable and disenfranchised sections of India’s  population, many of whom rely on alcohol production to make ends meet like the  Paashi, Musahar, etc community in Bihar.

Conclusion and National Level Policy Recommendations

In summary, while analyzing the current policy at the state level, prohibition did not  achieve its goals. After the repetitive inputs from different stakeholders, conflicts  between central governments agencies & state departments, its inefficiency, and  poor implementation at the state level indicates that there is a need for national-level liquor policy in India. 

The alternative and effective national policy will focus on the driving factors for its  better implementation such as Tax increases, prohibition, setting of uniform age limits on the purchase of liquor. An effective national-level policy for curtailing liquor  consumption will be an increase in prices via tax increases. And the part of the tax  revenues from uniform liquor tax will be used to educate the citizens and will lead to gains in reduced liquor consumption rates. 

Also, there is a need for a concerted drive against suppliers to break the chain. As  India does not have a national policy on alcohol, it would be better to constitute a  national policy that aims to reduce the harms of liquor both at the individual and  societal levels. The government should launch awareness programs to address the  problem, such as Nasha Mukti Abhiyaan in most vulnerable districts, create  integrated rehab centres, community-based peer-led intervention centres for  vulnerable children and adolescents, and establish outreach and drop-in centres.

About Utsah Vardhak

Utsah Vardhak is a final year undergraduate student of Business Economics (H) at Delhi University with a deep interest in Public Policy, Developmental economics, legislation, socio-political affairs, psephology, international relations among other areas. He is presently working with a Mumbai based management consultancy as a political research intern.

Disclaimer

The views expressed in this article are the author's own.

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