Andhra's wrong turn

Andhra Pradesh Chief Minister Y S Jagan Mohan Reddy is testing the state’s avowed ambition of becoming the next big destination for investment by demonstrating an unexpected level of capriciousness. Having arbitrarily cancelled clean energy projects awarded by the previous regime on the specious grounds of faulty bidding — a move that could draw the state into expensive international arbitration— its decision on Friday to cancel all bar licences marks another step in the wrong direction. The arbitrary cancellation of bar licences is the first step in a new bar policy that will come into force in January 2020, and be in effect for two years ahead of complete prohibition. 

As with Bihar in 2016, the motive for this move is unexceptionable: To reduce alcoholism, crime and alcohol-related deaths. As with other states, the impulse comes from women, who are, admittedly, the chief victims of alcoholism. In terms of gender politics, however, prohibition has proven a blunt instrument. With the jails filling up with offenders and the courts complaining of being overburdened with alcohol-ban related cases, Bihar has been forced to ease the penalties for flouting prohibition. It is unclear whether the state has been able to make good on the revenue forfeited from liquor sales. In Kerala, a ban imposed by the United Democratic Front in 2014 was reversed by the incoming Left government in 2017 after the state’s tourism-based economy suffered. In Haryana, the Bansi Lal-led Haryana Vikas Party’s (HVP’s) experiment with prohibition proved so disastrous that the administration was forced to reverse the order in less than two years. To compensate for revenue losses on liquor sales, the state raised power tariffs, bus fares and petrol sales tax. With smuggling flourishing (from nearby Delhi and Punjab), deaths from illicit hooch burgeoning and the hospitality business in the IT and foreign investment boomtown of Gurgaon (now Gurugram) all but moribund, the HVP found itself suffering severe electoral reversals in the 1998 Lok Sabha elections. This experience should stand as a cautionary tale for Andhra Pradesh. The state is expected to derive about Rs 7,358 crore through liquor sales (which remains outside the purview of the goods and services tax ) from its own revenue of Rs 65, 535 crore. This is a large amount to sacrifice. 

The irony is that the state’s prohibition phase-in programme offers some pointers to how the administration could tackle the social problems associated with alcohol consumption. It would be more practical to raise, as it proposes to do, retail and bar licence fees and impose punitive taxes on alcohol, as is done for tobacco, which has the virtue of carrying a deterrent value. Statutory health warnings on alcohol bottles and an effective anti-drinking campaign could spread awareness just as well. As for the problem of women coping with drunken spouses on payday, the Welsh mining industry solved this problem a century ago by simply paying the men’s wages to their womenfolk instead. To be sure, this is unlikely to deter determined topers — just as anti-tobacco laws do not discourage cigarette addicts. But it will prove less costly to the state exchequer and save countless deaths from illicit hooch that prohibition is bound to impose.

 



Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel