Prohibition in Tamil Nadu: Will it work?

In Tamil Nadu, the wholesale and retail sale of alcoholic beverages is a monopoly of the Tamil Nadu State Marketing Corporation (Tasmac), a company owned by the state government. In 2015, it was reported that more than a quarter of Tamil Nadu’s tax revenue from came Tasmac sales. The budget estimate for 2015-16 was projected Tasmac liquor sales at a staggering Rs 29,672 crore. On one hand, Tasmac revenues have helped the Tamil Nadu government tremendously over the years, but on the other, the issue of prohibition has become a key agenda for the larger parties—AIADMK, DMK and PMK— this election.

This contradiction raises two questions: First, how is the government planning to implement prohibition? Second, how they will replace the lost revenue stream? PMK’s CM candidate Anubumani Ramadoss and DMK’s Kalaignar Karunanidhi have stated that they will implement prohibition in one go. Jayalalithaa has said that she always wanted to bring in prohibition, but over several phases and not in one day.

The AIADMK and DMK have accused each other of creating and boosting the drinking culture in the state. But apart from the PMK, there has been no clear-cut strategy delineated by the other two parties on what they plan to do to generate revenue for the state.

Currently, in India, total prohibition is in force in Bihar, Nagaland, Gujarat and Lakshwadeep, while Maharashtra and Manipur have a partial ban in certain districts. Kerala is implementing its liquor ban in a phased manner. In July 2014, Mizoram lifted the 17-year prohibition in force with restrictions. Haryana imposed prohibition in 1996 and lifted it in 1998.

India's history with prohibition has shown that the it doesn’t really work. Consumption and sale of liquor cannot be controlled by the state irrespective of the laws as the market moves underground and a smuggling and bootlegger network starts to thrive with people stocking up on alcohol in their homes. Even today, people in Gujarat and Bihar reportedly have ways and means of getting their alcohol fix.

WHO's Global status report on alcohol and health 2014 said that an estimated 50% of the alcohol consumed in India is unrecorded. This falls under the non-tax paid, non-commercial and counterfeit activity. The 2014 report from the Organization for Economic Cooperation and Development’s (OECD) said that the per capita consumption of alcohol in India had risen by 55% between 1992 and 2012. It was the third largest increase in the world, the report added. 

The ban on the sale of alcohol has widespread repercussions for any state— loss in major excise revenue from the sale of alcohol, decline in tourism and decline in investments. In addition, the bootlegging network can lead to more criminal activity in the state and spurious liquor sales will skyrocket (leading to deaths as well). In Tamil Nadu, all those now employed in the 6000-odd Tasmac shops across the state will also need to be provided alternative means of employment. As for the loss of the nearly Rs 30,000 crore annual revenue from liquor sale, an alternative source of revenue has to be found immediately to fill the government's coffers.

The elections are around the corner in Tamil Nadu and despite the high-decibel discussion of prohibition, liquor sales in Tasmac shops have only increased. The Hindu reported that beer sales have in fact risen by 20% this April, during the scorching summer heat. The politicians talking prohibition may be trying to woo women voters but the sales at the Tasmacs indicate that that this social ‘evil’ can’t be done away with just one signature.