Bihar liquor ban: A year later, state still not sure whether to hail move

Govt says ban has led to a spike in sales of FMCG, milk and sweets, but others doubt these claims

It was a year ago that Bihar decided to end its tryst with alcohol. The decision was celebrated with much fanfare during the three-day Bihar Diwas. Chief Minister Nitish Kumar was beaming with pride. “You can’t imagine how much the image of Bihar will blossom if prohibition is successful. The demand for prohibition will rise from every nook and corner,” he said on March 22, 2016.

A year later, the benefits are still being debated. The state government claims crimes and accidents have fallen, which the critics of prohibition contest. While the government insists the social climate has improved, the naysayers point out that it has wreaked havoc with the state’s finances and made prospective investors weary. 

There is no doubting Nitish Kumar’s intent. In April 2016, he banned country and spiced liquor as well and made the state completely dry just four days later. The ban was struck down by the Patna High Court on September 30, but the state government quickly notified a new harsher law on October 2. Now even an empty liquor bottle is enough to put a person behind bars. More importantly, the whole family may be prosecuted if one of its members violates prohibition. Earlier this year, the state government also announced that not a single alcohol production and/or bottling licences would be renewed from this month onwards.

Showpiece achievement

However, the state leadership is not affected by the criticism. Chief Minister Kumar never loses an opportunity to showcase prohibition as his biggest achievement. During the Bihar Diwas celebrations, he declared: “Prohibition has ushered in a good environment in the state. People were afraid that the alcohol ban would result in loss of revenue, but it has helped them save Rs 10,000 crore. The money is now being used by them for improving their lives.”

 
According to government data, the demand for milk increased 18 per cent during 2016-17. Many other items too showed an increase: sale of honey quadrupled;  that of rosogolla climbed 50 per cent;  FMCGs witnessed 25 per cent growth;  consumer durables, such as TV, fridge and washing machine, grew 31 per cent; and two-wheelers witnessed 23 per cent increase. At the same time,  readymade garments and hosiery demand rose almost 50 per cent and jewellery sales jumped 11 per cent. The state leadership attributes all this to prohibition.  

The state government claims crime has fallen 27 per cent during April-December 2016 compared to the same period of the previous year: murder cases are down 22 per cent, robbery 23 per cent and rioting 33 per cent. The state government also informed the Bihar Assembly that road accidents have declined 17-20 per cent after prohibition was implemented. Encouraged by these numbers, Nitish Kumar has announced his government would now focus on “poorna nashabandi” (total de-addiction) instead of just “sharabbandi” (alcohol ban).

Not a good idea   

Critics doubt these claims. Many term the increase in demand as natural growth. “It’s very normal and it has nothing do with prohibition,” says BJP leader Sushil Kumar Modi. “During 2006-15, the number of vehicles in the state increased at least 10 times. There wasn’t any prohibition at that time, was there?”

Many also doubt the state government’s claims about the decline in crime after prohibition.

However, what is certain is that the state’s revenue has taken a hit due to the alcohol ban. The state government had targeted commercial tax collection of Rs 22,000 crore for 2016-17, but the collection is expected to be around Rs 18,000 crore, though the government raised VAT four times last fiscal.

Government officials remain optimistic. “There will not be any adverse effect. If there was any problem, expenditure would have been curtailed. But all departments have been allotted their money and they are spending it according to their needs,” Ravi Mittal, principal secretary of the finance department, says. However, government data shows that till February, several departments hadn’t spent even 50 per cent of their budget.  

The prohibition caused widespread resentment among investors. Last year, Carlsberg India CEO Michael Johnson publicly chastised the Nitish Kumar government for wooing the company for years, and then giving it just 12 hours to wrap up its business in Bihar.

“Since March 2016, every action by the government has been sudden and knee-jerk,” says United Spirits Chief Strategist Abanti Sankaranarayanan. United Breweries had invested more than Rs 500 crore in a beer bottling unit near Patna, but later it converted that into a fruit juice unit after it couldn’t get a licence.

“During his previous terms as the chief minister, Bihar used to be in the news for positive things. Now that perception has changed. Today, instead of development, we only hear about how after prohibition, 30,000 people have been put in jail. The exodus has also re-started as there are fewer jobs in the state,” says Amrit Kiran Singh, chairman of the International Spirits and Wines Association of India.

Over the past year, more than 43,000 people have been arrested for violating prohibition. It has also created an unforeseen problem: the jails in the state are getting overcrowded as only a third of the prisoners have got bail. Plus, according to senior excise and police officers, organised crime syndicates are also turning into the liquor trade.

According to Bihar Chief Secretary Anjani Singh, the benefits of prohibition far outweigh the costs. “We might have lost Rs 5,000-6,000 crore from the sale of alcohol, but we gained so much in return. You can’t ignore the fact that prohibition has been beneficial for the state.”

Women praise the ban

Even as the debate continues, there is widespread support for prohibition. Munni Devi, a resident of Rajauli village in the Vaishali district, is unaffected by the criticism. She says that her husband now gives more time to the family and buys her gifts. Her sons also come home early and evenings have become peaceful. “It wasn’t always like this. Drunken brawls and scuffles used to be a regular affair. Thanks to Nitish ji, that dark period is over now. People know that if they drink, police will arrest them,” she says.

The liquor ban has helped neighbouring states to make windfall gains. For example, after demonetisation,  liquor sellers in Uttar Pradesh cited 40 per cent dip in sales, but Balia, Deoria and Kushinagar, all next to Bihar, recorded a whopping 20-30 per cent rise in sales. West Bengal has reduced the number of dry days to just four from earlier 11. Jharkhand has revised sales estimates for districts bordering Bihar as numerous liquor shops have been opened in these areas.   

However, many feel the future will be more challenging for the state. “In today’s era, prohibition is not pragmatic. Several states decided to ban alcohol, but back-tracked later.As it’s the first year, the state put all of  its focus on it, but how long would it continue to do so?” asks Modi. At the moment, Kumar doesn’t seem to be perturbed by it.