Various state governments – like those in Bihar and Kerala – have, in recent years, banned liquor sales and consumption within their state. Both Bihar and Kerala government cited severe alcohol addiction among the people for this move. The Supreme Court of India also jumped into the bandwagon by prohibiting liquor sales within 500 metres of highways. While there has been a lot of debate over whether liquor prohibition is legal or not, the social and economic impact of such prohibition needs to be examined.
Before the imposition of restrictions, liquor was a huge contributor to the revenue of Indian states. It brought in about Rs 12,000 crore a year and Rs.4000 crore a year to the states of Kerala and Bihar respectively. Due to a ban on liquor consumption, these states will lose out on this inflow of money, which would force them to reduce spending. It is also to be remembered that both states have a debt of over 1.4 lakh crore, thus making it impossible to maintain the same level of spending in spite of reducing revenue. This might potentially reduce the funding of various anti-poverty and rural development policies, thus having an adverse impact on the development of the two states.
The prohibition on alcohol sales also has an impact on the tourism industry. A healthy growth in the tourism industry leads to an increase in demand of tourist goods like food and beverages, mattresses, etc., which encourages suppliers to produce more. This increased production leads to an increase in employment of labour force, thus reducing unemployment. The Government of Kerala put its tourism industry in jeopardy by imposing a partial ban on liquor sales in August 2014. Due to this, it witnessed a sharp decline in the the growth of influx of foreign as well as domestic tourists between 2014 and 2016. A shoddy growth in the tourism sector becomes problematic since it generated almost Rs.30,000 crores in revenue in 2016. This revenue becomes a tool for economic development and employment generation, particularly in remote and backward areas whose rich culture and tradition attracts tourists. The people in these areas may have potentially lost their livelihood as an indirect effect of the restrictions on sale of liquor imposed by the Government of Kerala.
This restriction also reduces employment directly, since the alcohol industry is a huge source of employment. Alcohol industry in India is considered to have a huge potential. This has attracted brewing companies from all over the world, who have set up manufacturing units in various parts the country. This has increased employment, especially in rural areas (where the factories have been set up). For example, a global liquor company established a liquor manufacturing plant in Bihar a few years ago, employs over 2000 people. Due to the liquor ban imposed by the Nitish Kumar-led Bihar government, however, these people suffered a loss of livelihood. The prohibition introduced by the Supreme Court would have a similar impact, with estimates suggesting that around 1 million people stand to lose their jobs because of the ban on liquor sales within proximity of highways.
All this may be justified if the social benefits accruing from this policy of prohibition were more than its economic costs. Even Bihar Chief Minister Nitish Kumar believed that liquor ban and the accompanying revenue concerns would be offset if there is widespread social change. The decline in the number of casualties due to consumption of hooch liquor seems to suggest that the liquor ban has had a positive impact on the society. However, it has been observed that illegal sales of liquor have increased in Bihar since the ban was put into place. Ram Kripal Yadav, the Union Minister of State for Panchayat and Rural Development, has claimed that liquor is still being manufactured and sold in every village of Bihar, despite the ban. There have also been reports of rising cases of drug abuse in the state. Further, as has already been mentioned, prohibition on liquor sales or consumption leads to an increased level of unemployment, which might force youth to resort to crimes, thus having an adverse impact on the society. All this appears to show that while there is a liquor ban on paper, it may not have reformed the society in reality. People have either violated the law or have looked at other modes of intoxication.
Not only is the prohibition economically inefficient and socially harmful, it is also unjust. Rawls’, in his book the Theory of Justice, lays down two principles of justice to test whether a particular law or policy decision is just. His premise is that each person has an equal right to basic liberties (like the right to occupation) and the state shall not infringe upon the same unless such infringement is to correct a social or economic inequality. The widespread supply of liquor had led to the creation of an inequality in the form of a social group comprising of men from lower socioeconomic strata of the society who are addicted to alcohol. The state has tried to correct this inequality by infringing upon people’s liberty. This infringement is just if it provides the greatest benefit of the least advantaged group of the society, i.e. people from the lower castes and backward classes. As has already been shown, prohibition of liquor sale or consumption leads to unemployment and an increase in crime, especially in backward areas. It also might lead to reduction in government spending on pro-poor policies. Thus, the policy does not seem to benefit the least advantaged group in the society, and hence, is unjust.
The new government in Kerala has already realised that prohibition is a bad idea and has, hence, overturned the liquor ban in the state. One can hope that other states (as well as the judiciary) also understand the full extent of the economic and social repercussions of liquor prohibition and resist the temptation to introduce such populist, though bad, ideas in the future.
(Views expressed by the author are personal)