A parallel economy: Bootleggers flourish in Bihar's liquor crackdown

In the dead of night, Rajesh (name changed) visits a graveyard in his town in central Bihar four times a week. “A desolate place like that is safe to receive my weekly consignment of alcohol,” he said. “We keep changing locations. Sometimes we meet deep in the farmlands.”

Clad in a pair of greasy shorts and a torn T-shirt, Rajesh, in his mid-40s, is a car mechanic but his biggest earnings--over Rs 1 lakh a month--come from bootlegging in the state that was declared dry in 2016. “Don’t go by my attire,” he said with a laugh, squatting on a small stool in his garage where this reporter met him in early October.

Ahead of the 2015 assembly elections in Bihar, chief minister Nitish Kumar had promised to ban the consumption of alcohol in the state if re-elected. One of the aims was to curb domestic violence, often linked with excessive drinking. After he swept the elections and assumed his third consecutive term as chief minister, Kumar announced prohibition in the state.

Before the liquor ban, Bihar consumed close to 25 million litres of alcohol each month, as per state excise department figures shared with IndiaSpend. The same year, the estimated all-India figures for alcohol consumption stood at about 5.4 billion litres. Soon after the ban was effected, illicit liquor trade started proliferating in the state.

With state elections under way, bootleggers are doing brisk business. “This is the time to make money,” Rajesh said. “Politicians need to distribute alcohol among voters during their campaign. Sales skyrocket ahead of an election. We made a lot of money during the 2019 general election too.”

IndiaSpend is exploring the impact of the liquor ban in Bihar in a two-part series against the backdrop of the assembly elections. In the first part, we explained how prohibition has pushed the consumption of cheaper hooch and drugs. In this concluding part, we look at the state’s thriving parallel economy of illicit liquor, and how the crackdown against violators has disproportionately affected the marginalised social groups such as the mahadalits (the most deprived among the dalits) and the tribal communities that have been traditionally engaged in the liquor business.

The problem with the implementation of the prohibition in Bihar is that alcoholism is being dealt with as a law and order--and not social--problem, said Pushpendra Kumar, professor, Tata Institute of Social Sciences, Patna. “The state could have taken some time to do more public awareness campaigns, consulted relevant stakeholders, put up de-addiction centres and so on,” he said. “The state’s responsibility does not stop at banning liquor: It should have thought of different categories of the society. Getting admitted to a de-addiction centre also means the people have to forego their work days. Not many can afford to do that. Plus, getting admitted to a de-addiction is seen as a taboo, and not everyone has the support system to seek rehabilitation.”

In our investigations across four districts of Bihar, we found many cases where labourers earning paltry daily wages were slapped with large fines they could not afford, and had to take loans that pushed them further into debt.

‘What are the alternatives?’

Rajesh is one of the most sought-after bootleggers in his small town, smuggling alcohol into the state via Uttar Pradesh, Jharkhand, Haryana and Punjab. Right behind his garage is a ditch full of empty bottles. Such trenches are visible across the state, especially near the farmlands, we found.

When the illegal liquor trade began in Bihar, there were few bootleggers and they operated with immense caution. The word ‘alcohol’ was never used, said Vijay (name changed), 27, a former bootlegger. “We had code words--chavanni [25 paise] for a quarter, athanni [50 paise] for half a bottle and so on,” he said. “A new customer had to come through the old one. But because it was a dangerous time, that was also the time to mint money.”

Soon, the trade was flourishing, bringing more money and confidence to well-networked bootleggers. “I fixed cars all my life, I could not provide a decent standard of living to my family,” Rajesh said. “After Nitish [Kumar, the chief minister] banned liquor, a big vendor from town asked me to join him. I have since been a part of this trade. Once my package arrives, the town’s mid-level distributors also get their stocks.”

The night Rajesh receives his consignment, “distributors” line up with their eight-wheel pickup trucks. Subhash (name changed) is one of them. “I worked at a wine shop before the liquor ban,” he said, wearing a band on his right wrist that reads Berozgari Hatao [eradicate unemployment]. “I lost my job. So what I used to do legally, I continued with it illegally. Did Nitish Kumar provide alternate jobs before rendering us jobless? He has not created any industries. If you cannot create new jobs, at least don’t take away existing ones.”

Bihar’s unemployment rate by October 2020 was 9.8%, well above India’s 6.7%. Rajesh and several others we spoke to believed that the impact of prohibition will cost the Nitish Kumar-led Janata Dal (United) popular votes this election. “At least the state received revenue earlier. Now that money is floating in the black market,” Rajesh pointed out.

Just before the ban, in 2014-15, Bihar made over Rs 3,100 crore ($416.3 million) from excise duty on liquor sales, according to the Economic Survey of 2016. The survey pointed out that the estimate for 2015-16 was Rs 4,000 crore ($537.16 million). For perspective, the state government’s budget provision for the mid-day meal scheme in 2020-21 was Rs 2,554 crore ($343 million)--about 64% of the estimated Rs 4,000 crore.

However, this loss should be juxtaposed against the savings the state makes in terms of reduced healthcare and law and order costs, as well as fewer instances of domestic violence, said Patna-based economist N.K. Choudhary. “The economic loss must be seen in the context of social cost,” he said. “When you look at the micro view, you see the budgetary loss. But you have to factor in the money you spend on law and order and health because of liquor. It also leads to violence against women. But it is true that the liquor ban has also led to corruption with a parallel economy of sorts coming up in Bihar.”

Over 3 million litres of liquor have been confiscated in Bihar up to October 20, four and a half years since prohibition, officials of the excise department told IndiaSpend.

Up to 1.4 million litres of this confiscated liquor was country-made and over 1.6 million litre foreign-made, as per the excise department. This shows how rampant alcohol consumption in the state is, said Manoj Kumar, founder of an NGO, Ek Kiran Aaroh, which works among the state’s marginalised groups. “If that is the liquor they have managed to seize, one can only imagine the amount flowing seamlessly through Bihar,” he said.

The two brands being sold the most are Imperial Blue (IB) and Royal Stag whiskey, said Subhash. “A quarter of IB goes for Rs 150, a half bottle costs Rs 300 and a full bottle Rs 600,” he said. “One box either has 48 quarters, 24 half bottles or 12 full ones. There is ample liquor coming into Bihar.”

Subhash distributes 50 such cartons every week, or alcohol worth Rs 3.6 lakh. “I make about Rs 300 per box, which is about Rs 60,000 per month,” he said. “That is way more than what I earned in salary while working at the wine shop. If there is more demand for better brands, my income goes up further.”

The more expensive brands bootlegged include Blenders Pride and 100 Pipers, he said. “Blenders Pride costs Rs 1,500 a full bottle, while 100 Pipers goes for Rs 2,500,” he said. “That is what the police, doctors and bureaucrats normally drink.”

Administrative connivance

In May 2017, the Bihar police claimed that rodents had finished off 900,000 litres of alcohol seized from the public. In October 2018, two policepersons were arrested for selling the liquor they had seized.

The ease with which the business is carrying on would be impossible without the involvement of the state’s law enforcement agencies, alleged several bootleggers this reporter met. “Smuggled trucks are often emptied in the presence of the police,” said Rajesh. “Or the police are told to not patrol a certain area during a certain time. Even when they confiscate a truck full of liquor, they let it go with a Rs 10,000 bribe. If they are under pressure to show they have seized alcohol, they will keep half the stock and release the rest.”

To escape detection, many bootleggers pay poor farmers and labourers in villages to hide their stock, said Subhash. “Many of our carriers and delivery boys are school- and college-going children who fund their studies with this money because their parents can’t.”

When they run out of liquor, bootleggers approach the police station, said Rajesh with a smile. “They always have it,” he said.

Nayyar Hasnain Khan, IG Headquarters, Bihar Police, said his force is challenged by the fact that the state is landlocked. “The sealing of the entire border can’t be implemented as such in totality,” he said. “People across the border are linked culturally and economically.”

However, Khan maintained that the state is running a concerted drive to eliminate corruption but admitted to “ups and downs”. “The police is a big organisation and you will find certain exceptions of corruption have crept in,” he said. “But we have taken serious action against a number of officers and men found to be involved with the illegal liquor trade. There is also a provision in the Excise Act that any government official who tries to misuse his position is liable to legal action.”

So far, 52 police officials have faced inquiries for being in cahoots with bootleggers, according to the excise department records we accessed. Of them, 36 have either been suspended or faced departmental inquiries. Seven have been dismissed and nine penalised or faced administrative inquiries.

However, the brunt of the police crackdown has been borne by the marginalised sections of society, said Manoj Kumar. “How many big leaders have been arrested for violating the liquor ban?” he asked. “How many senior bureaucrats? How many from the judiciary? It is always the poor that are made examples of. The rich get away by bribing authorities, while the poor get entangled in a court case that pushes them further into debt.”

Marginalised are disproportionately affected

The manner in which prohibition arrests are made indicates a bias among the state’s law enforcement agencies, said Patna-based social scientist D.M. Diwakar. “They are arresting carriers, not businessmen,” he said. “Carriers are poor, helpless people looking for employment. They have to do it to run their household.”

The first conviction under the liquor ban in Bihar came in July 2017. Mastan Manjhi, 45, and his brother Painter from the town of Jehanabad, 50 km from Patna, were sentenced to five years’ imprisonment and fined Rs 1 lakh each for consuming alcohol. This was before the law was amended in 2018 to reduce the sentence to a three-month jail term or a fine of Rs 50,000 for first-time offenders.

The Manjhis belong to the Musahar community, the mahadalits of Bihar, and earned Rs 250 a day plying rented pushcarts. Over two years after their conviction, the Manjhi family remains deep in debt. “I had to borrow Rs 1 lakh for Mastan’s fine from a private moneylender,” said his wife, Siyamani, 40. “The interest is 5% per month. I don’t know how we can sustain the family, buy food, educate our kids and repay the loan at the same time. You can ban liquor but the punishment should be proportionate.”

In May 2017, the excise department team had picked up the brothers on a quiet day. The Jehanabad district court imprisoned them in July 2017. Six months later, the family managed to arrange bail from the Patna High Court. “We had to sell 10 pigs that we rear at Rs 3,000 each,” said Siyamani sitting outside the hut in their Musahari toli (settlement). “Otherwise, he would have continued to rot in jail.”

In many instances, the police do not even inform the families of those arrested, said Santosh Kumar, Patna-based lawyer-activist, who has bailed out hundreds of underprivileged people brought in for violating prohibition. “The police bring them in hands and feet tied with a rope,” he said. “It is dehumanising. Many in Patna are working here because it is the capital city. Their families are in different parts of Bihar. The police do not even bother to let them know. In several cases, I have contacted the family and secured their bail. They do not have the money to pay for the bail bond.”

Ever since he has been out on bail, Mastan has been working extra hard to pay off his debt. However, at the interest rate charged by the moneylender, they have to pay Rs 5,000 a month--the sum total of what Mastan earns in 20 days in a good month. The principal amount equals Mastan’s wages for 400 days.

When we visited in October, there was little work available in the aftermath of the COVID-19 lockdown, and Mastan returned home empty-handed on most days. “I was in favour of the liquor ban,” Siyamani said. “But it has wrecked our lives.”

Between April 2016 and September 2020, the law enforcement agencies have conducted 488,450 raids, arresting 67,367 people, data from the excise department show. The highest number of raids, 120,481, were in 2017, when 21,292 people were arrested.

In November 2019, the Patna High Court pulled up the Bihar government for clogging the courts with over 200,000 cases related to the liquor ban.

Some ‘big’ arrests

In May 2018, two years after the liquor ban, The Indian Express investigated the social profile of inmates arrested under the prohibition law in Bihar. Across three central jails, 10 district jails and nine sub-jails, the report found that the percentage of inmates belonging to the Schedule Castes, Schedule Tribes and Other Backward Classes exceeded their share of the state’s population.

However, the police have also arrested the big fish involved in smuggling and made “spectacular recoveries”, particularly during the elections, said Khan. “But there are tribal areas and social groups that traditionally engaged in making liquor. It is a challenge to demotivate them from doing it because for centuries it has been their system of livelihood,” he said. “The social welfare department has tried to provide them alternate livelihood but more needs to be done. These are the loopholes we still need to counter.”

About a year ago, Rajmanthi Devi’s husband was picked up for making liquor in Kanchanpur, one of the Musahar tolis in Bodh Gaya. “The drum was empty but the police could smell mahua (a flower used to make fermented country liquor),” said Rajmanthi Devi, who puts her age at “around” 45. “He spent about 10 days in jail. We had to borrow Rs 6,000 at an interest of 10% per month to get him out.”

That is an interest rate of 120% per annum. In contrast, the annual interest rates for housing loans start at 6.7% currently.

“I think we have repaid Rs 2,000 of the loan,” guessed Rajmanthi Devi, sitting on a charpai outside her hut. “I have four kids. We live hand to mouth. My husband works as a labourer earning Rs 300 per day. If we do not earn, we do not eat. We have spent days eating nothing after the lockdown.”

The law works against the poor, she added: “He did not steal anything. The rich drink alcohol all the time. They don’t end up indebted at the end of it. There are so many bootleggers running the liquor mafia in Bihar with impunity.”

Vijay, who traded in illicit liquor for three years, made enough money to quit last year. “I never understood why people drink in any case. I guess I am like the halwai (confectioner) who can’t stand sweets because he smells them all day,” he said. Vijay now has a two-storied house and even holds a government job. “Liquor ban has not worked anywhere, and it never will,” he said.