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Business Commentary/Dilip Thakore

The prohibitive price of prohibition

For several centuries April 1 has been celebrated all over the world as All Fools Day. On this day practical jokes and pranks are tolerated and the more ingenious among them invite general admiration. But paradoxically, April 1, 1998, was the day when the light of wisdom dawned on the tiny (population: 16.5 million) north Indian state of Haryana which ended its disastrous 20-month experiment with liquor prohibition. On April 1, sale or consumption of alcohol ceased to be a criminal offence in Haryana.

The reversal of the state's prohibition police introduced on July 1, 1996, is a milestone event not only in the history of Haryana which together with the neighbouring state of Punjab enjoys perhaps the highest per capita income in India, but also for the rest of the country. Because it is likely to be the final decisive cross into the heart of the vampire of prohibition which periodically rises to haunt and harass the citizenry all over the country. Almost every one of the 28 states in the Indian Union has either imposed or flirted with the idea of imposing prohibition with the altruistic but foolish motive of weaning the populace from the bottle.

Last year, the southern state of Andhra Pradesh also ended its prohibition experiment in similar circumstances. Today there is only one 'dry' state in this country -- the western Indian state of Gujarat which is paying a heavy price in terms of the steady criminalisation of its society for persisting with its Gandhian legacy of prohibition.

But though wisdom which was highlighted the socio-economic folly of imposing prohibition has perhaps finally dawned upon the Haryana state government (and perhaps all other state governments as well), it would be naive to believe that it was the mental acuity of the state's purblind politicians led by Chief Minister Bansi Lal (who acquired notoriety during the Emergency when he was the strong-arm Union home minister) which has led to the reversal of Haryana's short-lived prohibition experiment.

The people of Haryana have paid a stiff price for their 20-month flirtation with prohibition. The state exchequer has forfeited Rs 12 billion ($ 300 million) in excise revenue part of which was made good by raising electricity and water tariffs and bus fares. In addition, the state's already over-burdened legal system was choked with the registration of 98,699 liquor related prosecutions of which 59,881 were non-bailable (possession of more than two bottles of liquor).

Almost overnight, illicit brewing and liquor smuggling from the five 'wet' states surrounding Haryana -- Punjab, Himachal Pradesh, Delhi, Uttar Pradesh, and Rajasthan -- became one of the biggest industries in the state. Moreover, the state's carefully built and nurtured tourism industry suffered disastrous losses as the traditionally heavy weekend traffic into its well-planned motels network was substituted by a weekly exodus of tourists into neighbouring wet states.

It was this growing awareness within the populace that the cons of prohibition heavily outweighed the pros which led to the reversal of the ban upon liquor sale and consumption within the state. The last straw for Bansi Lal was the severe drubbing that his party, the ruling Haryana Vikas Party, received in the recently concluded parliamentary election, and his own son (who was elected to the Lok Sabha) speaking out against the state government's prohibition policy. The growing public awareness that prohibition is inevitably a can of worms, rather than the questionable intellect of the state's politicians, turned the tide.

From the viewpoint of the public good it is a tragedy that it took so much damage to society and the exchequer to make Haryana's politicians come to their senses. Virtually every fourth estate columnist (including this one) had predicted that the debits of prohibition would outweigh the credits and the newspapers were awash with dire predictions forecasting the doom of the policy and the criminalisation of society in Haryana. But driven by the alluring prospect of securing the women's vote, the state government went ahead and imposed prohibition anyway.

The first explanation of the obstinacy with which politicians pursue the chimera of prohibition is that they are much more ill-read than is popularly believed. A second one is that, on the contrary, they are quick to grasp the unique opportunity that the imposition of prohibition offers for the quick enrichment of themselves and the shady cronies who constitute the inevitable baggage train of most politicians.

This, and the prospect of winning the votes of women fed up with the intemperance of their menfolk offered, a tempting prospect. But the significance of the prohibition U-turn in Haryana is that even illiterate village women have realised that the debts of prohibition are greater than the credits. That is why they voted massively against the Bansi Lal government in Haryana in the recently concluded Lok Sabha election.

The futility of imposing prohibition apart, another important lesson which politicians across the country need to imbibe after the failure and reversal of prohibition in Andhra and Haryana, is that excise duties on liquor must be reduced and rationalised. The brewing of dangerous illicit liquor cannot be prevented unless relatively safe organised sector liquor is available at reasonably affordable prices. And in this connection all state governments need to exhibit a bias in favour of relatively softer and safer liquors such as beer and wine which need to be taxed lightly. Indeed preferential taxation could sow the seeds of a flourishing Indian table wines industry given that this country is now a major producer of grapes. Currently, no state government makes a distinction between hard and mild liquors for purposes of taxation.

The rationalisation of the excise duty structure to encourage a preference for milder liquor has to be supplemented with sustained education campaigns in all the states advocating the virtues of moderate consumption of alcohol. But at bottom there is no escaping the vital necessity of visiting stringent punitive action against drunk and disorderly conduct. State governments across the country urgently need to shed their soft state characteristics and actively prosecute citizens guilty of drunk and disorderly behaviour. In particular there is an urgent need to crack down on drunken driving -- particularly truck drivers plying the national highways -- which has earned India the dubious distinction of annually suffering the world's highest number of road accident injuries and fatalities.

Restraining the consumption of alcohol in the societal interest is a complex and complicated duty of government requiring sophisticated carrot and stick policies. Hopefully the U-turn in Haryana will impact this reality within the corridors of power in New Delhi and the state capitals and bury the dangerously simplistic solution of prohibition forever.

Dilip Thakore