The Indian Liquor Industry Prohibition Story

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The Debate Contd...

Analysts claim that the fact that the business of alcohol has been legal for so many centuries does not negate the ill effects associated with it. If one strictly followed the logic of the necessity of excise revenues, then governments might as well legalize the narcotics, gambling and child labor businesses and earn substantial revenues. One of the biggest sufferers during this period were the players in the Indian liquor industry. Though the financial implications of prohibition in only a few states were reportedly not that high, the companies had to nonetheless live with the constant threat of prohibition being imposed in some state or the other.

A Problem Unsolvable Restraining the consumption of alcohol to safeguard the interest of the society is a complex and complicated issue. According to analysts, unless the state governments established well-defined regulations; gained the complete co-operation of the enforcing authorities; ensured a speedy disposal of cases; took tough action against offenders; and set-up a fool-proof control system to prevent smuggling and the emergence of illicit liquor businesses, it would be impossible to make prohibition a success. The Indian liquor industry argues that since the brewing of dangerous illicit liquor is difficult to control, it would be advisable to make safe, organized sector liquor available at reasonable, affordable prices. By introducing differential taxes for hard and soft liquor (beer) the illicit liquor evil could be weeded out. Instead of trying to curb the consumption of liquor, the industry felt that state governments should run sustained education campaigns in these states, advocating the virtues of moderate consumption of alcohol.

By the end of 2001, partial prohibition in the southern state of Tamil Nadu seemed to be failing miserably. During September-November 2001, over 85 people died due to the consumption of spurious liquor. Since the state government earned substantial revenues from arrack and toddy sales, it seemed to be unwilling to impose prohibition.

Meanwhile, in mid 2001, anti-liquor protests by women began once again - this time in Kadahalli, a small village in Karnataka. As a result, issues like the social responsibility of the liquor industry, its right to do business and the viability of prohibition again began to be hotly debated. It was also rumored that it was a matter of time before the Gujarat government lifted prohibition, since it was finding it difficult to do without the Rs 18-20 billion generated by excise duty on liquor sales.

Exhibits

Exhibit I: The Indian Liquor Market