Most politicians struggle to make good on pre-election promises, but Bihar Chief Minister Nitish Kumar would do well to renege on his pledge to women in his state to impose alcohol prohibition, as he plans to do from April 2016. Mr Kumar is, no doubt, imbued with the best of intentions: Women pay the price for the effects of alcohol consumption by the men in their families in terms of income appropriation and domestic violence. But had Mr Kumar investigated the reasons for the failure of prohibition elsewhere - whether Andhra Pradesh, Haryana or several north-eastern states - he would realise the magnitude of his error, however well-meaning the motive.
There are both economic and social issues involved, and they are by no means unrelated. Mr Kumar articulated the dilemma well when he described forfeiting Rs 4,000 crore on excise from liquor as the cost of public interest. With a none-too-healthy ratio of own tax revenues to gross state domestic product (about five per cent against an average of 6.5 per cent for all states), Bihar can ill afford this giveaway; nor does the state generate sufficient economic activity for this deficit to be recouped by taxing other products. In any case, the equation rarely works. In Andhra Pradesh, five years of prohibition widened the state deficit, despite new taxes on consumer goods and vehicles, to such an extent that Chief Minister Chandrababu Naidu was forced to rescind the ban. Haryana, which had prohibition from 1996 to 1998, cost the state Rs 1,200 crore in excise losses despite imposts on power tariffs, bus fares, petrol sales and small businesses. In fact, many Indian states rely heavily on excise duty on liquor. Kerala, with partial prohibition in place, receives nearly a fourth of its revenue from liquor excise. Tamil Nadu is the largest tax collector on liquor mainly to fund its expanding welfare schemes. Losses to the state exchequer cannot be considered an amoral economic argument either. Thousands lost livelihoods in the legal liquor manufacturing and supply chain (including truckers and bottle producers). Worse, both states paid the price in a marked deterioration in law and order and healthcare outcomes. Habitual drinkers are unlikely to stop because of a ban, so illegal liquor mafias flourished and hundreds died agonising deaths from illicit liquor brewed from expired battery fluid and other lethal chemicals. Even a World Health Organisation report of 2014 argued that prohibition created risks to consumers, constrained commercial freedoms and exacerbated the black market.
To address the valid complaints of the women in his state, Mr Kumar also has easy solutions on hand. He could make it mandatory for worker incomes to be paid to the women-folk, an expedient that has long been discussed as part of the direct benefits transfer plans for subsidies and welfare payments via Aadhar. Schemes like Jan Dhan and payment banks are already in place to facilitate such payments. In the long run, Mr Kumar may discover that working towards empowering women financially and ensuring enforcement of law against violence of any kind is a more robust way of protecting their rights than submitting to a policy that, on balance, does more harm than good.
