Liquor trade says TN too dependent on booze revenue to go dry

Chennai: Every party seeking to lead the Tamil Nadu assembly is promising prohibition, but the liquor industry says going dry isn't feasible for the state, which would become financially vulnerable without revenue from alcohol.
"Any government in power or any party that aims to hold power needs to deliberate on the economic and social consequences of prohibition.The history of prohibition in TN highlights important lessons that cannot be ignored," said NR Jagdale, vice-president, All India Distillers Association, and CMD of Amrut Industries.
"When it comes to revenue loss on account of introduction of prohibition, TN appears to be more vulnerable than most states for two reasons: First, revenue from alcohol is as high as 25% of its total revenue, a proportion that is difficult to recover from other sources. Second, TN has introduced a number of welfare measures and is in the process of introducing more such measures. In this context, introduction of prohibition and the resultant loss of revenue is bound to affect its welfare measures designed to benefit the poor," Jagdale said.
He pointed out that other countries had tried to enforce prohibition but had failed. "The case of the US, which tried prohibition in the 1920s and 1930s comes to mind. Failure of prohibition in India and in every other country that tried it is well documented," he said.
Prohibition in any state would mean forgoing a substantial amount of revenue. "To compensate for this, taxes on other commodities may have to be raised," Jagdale said.
After Independence, Tamil Nadu had total prohibition till 1971. This was lifted to plug leakage of revenue to neighbouring states and avoid sale of illicit liquor, which was a public health hazard. Though prohibition was re-introduced in 1974, it was lifted again in 1981. "Since then, the state has experimented with partial bans (on toddy/arrack) from time to time but has been forced each time to lift prohibition because of twin factors - loss of substantial revenue and entry of illicit products," Jagdale said.
Tamil Nadu's liquor market, tightly controlled by a state corporation, Tasmac, normally sees a shake-up following any change of government. With prohibition being the central political theme of the upcoming election, the fate of an industry which contributes more than Rs 30,000 crore to state's revenue hangs in balance. Tasmac operates over 6,600 retail shops. Private participation is limited to about 1,000 bars and 90-odd clubs in the state.
Total government revenues from alcohol sales in Tamil Nadu grew 9.5% for the year ended March 2015 to touch Rs 27,823 crore. "For the current year, the numbers could be much higher as Tasmac effected two price hikes - one for excise duty and the second for manufacturers," sources said.
TN revenue from alcohol in 2014-2015 - Rs 27,823 crore
No. of Tasmac shops in TN: 6,600
Private liquor outlets in TN: 1,000 bars and 90 clubs
Ways to promote responsible drinking
Reduce the number of liquor shops to one in every pin code to reduce impulse consumption.
Crack down on drunken driving
State and liquor industry should fund education on ill effects of alcohol abuse
Creation of centres to treat alcohol addiction