Prohibition will adversely affect Bihar: Rothin Roy

Health, education to be impacted first; samosa tax won't make up for Rs 3,000 cr revenue loss on account of ban

Noted economist and director of the National Institute of Public Finance and Policy Dr Rothin Roy stated on Monday that prohibition will adversely affect the Bihar's finances. He also warned that health and education will be the first to bear the brunt.

Referring to the state government's move to impose tax on edibles to boost up its revenue, he termed them inadequate. Speaking at an international conference on Social Statistics in India, organised by Asian Development Research Institute (ADRI) as part of their Silver Jubilee celebrations in Patna, Dr. Roy said, "Bihar was among the better fiscally managed states till last financial year. The state had a healthy revenue surplus and its own tax revenue was growing at a commendable rate. However, after the imposition of prohibition, state finances are bound to be hit. At least Rs 3,000 crore is expected to be the impact of liquor ban and it will go up in the future. No samosa tax will help you raise that much money. The revenue surplus will disappear and it will not be good for the state."

He said Nitish Kumar led state government have to look at ways to make for the revenue loss. "For this, the government will have to focus on three specific areas to mop up some of the losses. Firstly it has to mobilise its own revenue. Secondly, it will have to re-prioritise some of items of consumption and finally it must work to promote privatisation," he said.

Warning that the health and education will be first sectors to be affected by this ban, he said, "While it was a positive welfare measure, it threw major fiscal challenges. The government have to cut down its own expenditure as there are limited avenues to boost up its income. It will have to borrow more and therefore have to pay more on interest payment. Education and health will be the first victims of the expenditure cut. The state government have to make some hard choices in the coming future."