The Directive Principles of State Policy and Article 47 of the Constitution assigns the state the onerous task of introducing prohibition on consumption of liquor with the objective of improving public health. Gujarat was the only state which took the lead in implementing this idealistic goal, but it was widely accepted by other states that prohibition may not be feasible given the revenue potential of the liquor industry.
Electoral politics guided Haryana, Tamil Nadu and And-hra Pradesh to experiment with prohibition but it proved to be financially disastrous and failed given the challenges in its implementation. Since 2014, prohibition politics is back in flavour given the large women vote bank and the large political dividends it has yielded to the politicians in Kerala, TN and Bihar.
It’s baffling how we human beings in general and politicians in particular fail to learn from history and repeat the same mistakes. Nations have experimented with prohibition and failed, the Indian states which introduced it backtracked soon given its disastrous consequences.
In this context, the stringent prohibition law the Bihar government is determined to introduce is a classic example of the draconian law which infringes on individual freedom of choice and of the often-stated trade-off between good politics and bad economics.
Loss of the large revenue from prohibition is a well known fact. For instance, alcohol taxes accounted for 1/6th of the total Bihar’s revenue in financial year 2015 and in Tamil Nadu, it yielded about Rs 27,000 crore. There is always the social and moral argument against alcohol consumption that cannot be challenged but in the Indian context where excise duties on liquor is the most important source of st-ate revenue, the loss of this vital source of revenue would place a huge strain on state’s finances.
The last decade has seen the emergence of the ‘freebies raj’ where the poor and marginalised are beneficiaries of the state’s largesse. Bihar has seen noticeable improvement in its infrastructure and plethora of welfare schemes in Nitish Kumar’s period. These politically and socially popular programmes will be under strain with prohibition policy.
Economic rationale points out that any form of state intervention in market functioning leads to undesirable consequences. Experience in India and abroad indicates that prohibition leads to bootlegging, smuggling and use of illicit liquor which has always led to human tragedy. Dry Gujarat has seen all this. The latest one was the death of 16 people at Khajurbani in Bihar. Bihar’s draconian law which puts the onus of crime for possession of liquor on the entire family, is also bo-und to unleash an era of harassment and corruption. And in many cases, it is the women folk of the family who face the wrath.
Appeasing castes, parties
Another facet of Bihar’s prohibition policy is the exemption they have given to desi liquor – toddy – just to appease some castes and political parties. This definitely weakens Nitish Kumar’s moralistic argument justifying prohibition. The prohibition policy of Kerala, a state which still professes its love for Communism, is a clear violation of equality principle.
The exemption given to five star hotels is a clear violation of the fundamental principle of democracy and equality before law. The state has also seen the emergence of the black market. A huge blow to the state’s main source of revenue – tourism – has already led to a demand for rethinking of this non-egalitarian prohibition policy of Kerala.
At a time when the Centre is busy ranking the 30 states on Ease of Doing Business and also focusing on improving investment climate in the country, politics-driven policy arbitrariness will drag us down. Danish brewer Carlsberg’s million dollars of investment in Bihar is under cloud given the government’s prohibition policy. Its inconsistencies like these in policymaking which sends wrong messages to foreign investors.
Why do politicians take high moral ground while advocating prohibition policy? Nanny state which dictates what we eat, drink and wear is a violation of our fundamental right to freedom of choice. The state must not be dictating morals or value to its citizens.
So do we raise the bogey of revenue, investment and indivi-dual freedom at the cost of hum-an health and social benefits to reject prohibition? No. But there is a need to be realistic. If we want to make a difference in the quality of life of millions of poor, protect the family’s hard earned income from being squandered on liquor and also ensure security to women and children, prohibition is not the solution.
The state governments and political leaders must realise the best antidote to most of the social evils is education. Focus on strengthening education infrastructure, quality of teachers and reduce the dropout rate. This would automatically solve the many evils which are associated with liquor consumption.
Lastly, politicians must refrain from politicking with economic policies as the nation pays a huge price for this. As long as political reasoning dictates policy making and overshadows economic reasoning, we will fail to make progress as a society and nation.
(The writer is Associate Professor, Dept of Economics, Mount Carmel College, Bengaluru)