The Bihar Post

Liquor ban counter-productive, promotes counterfeit products causing health risks, says top liquor body

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PATNA—The International Spirits & Wines Association of India (ISWAI), an apex body of the premium AlcoBev sector, has strongly urged the Bihar government to engage in a consultative and progressive policy-making process to ensure responsible alcohol consumption, instead of banning the sale and consumption of liquor in the State.

Explaining why Prohibition does not achieve its objectives but leads to larger consumption of illicit and counterfeit liquor, ISWAI’s chief executive officer Nita Kapoor said the prohibition is counter-productive, promoting illicit, counterfeit, and unsafe products causing health risks.

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“It also leads to loss of control over the establishments where production, sale and consumption take place. Instead, consumption of alcohol spreads through speakeasy restaurants, middle-class neighborhoods or business districts that were formerly tightly regulated. Once there is a loss of control over the source and destination of alcohol, there can be no mechanism to find out what kind of alcohol is making its way into the marketplace; hence the occurrence of unfortunate hooch tragedies,” she said.

She added that to address the abuse of alcohol, the policy of restriction needs to go hand in hand with a sustained long-term awareness and education campaign to build a culture of Responsible Consumption.

Kapoor further added, “Besides revenue loss to the state, prohibition adversely impacts the investment climate across allied industries and increased dependency on Central grants. As per calculation based on the data from PRS State Budget document, the extend of Grants-in-aid from Centre to Bihar nearly tripled from INR 18,171 crores in 2015-16 Budgeted Estimate (BE) to INR 54,531 crores in 2021-22 BE; potentially eclipsing the revenue loss due to prohibition.”

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Emphasizing the point that prohibition leads to revenue loss to the state, ISWAI’s Secretary-General Suresh Menon said Bihar completed five years of total ban of sale and consumption of liquor on April 5, 2021.

“Liquor sales used to be a major source of revenue for the state exchequer. In 2015-16, Bihar earned INR 4,494 core from AlcoBev – (INR 3,141.7 crore in state excise and VAT of INR 1,353 crore); after prohibition was imposed in 2016, these revenues from AlcoBev which were 17.7% of the state’s own tax revenues of INR 25,449 crore in 2015-16, dropped to zero. This entailed a substantial loss of revenue for the state government,” Menon explained.

He said enforcement of liquor ban had not proved successful in few Indian states like Haryana, Andhra Pradesh, and Kerala which had to ultimately repeal it.

Menon said, “Imposing prohibition on liquor in many Indian states has not proved to be successful. It is critical to learn from the Kerala experience, where prohibition in the AlcoBev sector led to a loss in state revenues, a decline in national and international tourism, thereby resulting in job losses in the industry value chain, especially in the HoReCa sector.”

Recently the Andhra Pradesh government, he informed, announced a progressive liquor policy by moving away from Prohibition to Restriction. “The negative fallouts of the earlier policy have been a decline in tourism, a drop in state revenues, mushrooming of illegal, spurious products and bootleggers, increase in smuggling of liquor from neighboring states, etc,” he said.

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