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In the horns of a dilemma

With most political parties opposed to liquor trade and with AIADMK agreeing for gradual implementation of prohibition, the Supreme Court judgment is a trigger for accelerating this. But coping with this is going to be arduous.

In the horns of a dilemma

The Supreme Court’s order banning the sale of liquor close to national and state highways from 01 April will impact 60 per cent of the 5200 outlets of the state-run Tamil Nadu State Marketing Corporation (TASMAC).  This will have serious revenue implications for the state which gets a third of its total state tax income from liquor business. And this comes at a time when the state is already reeling under a severe resource crunch.

It is not as if this was a sudden development. Over a year ago, in the campaign for the elections to the state assembly, several opposition parties demanded the re-introduction of prohibition. There was widespread support from several sections of citizens, particularly women. The latter complained of the breadwinner squandering his wages on liquor leaving the family in distress. Gauging the mood, then chief minister Jayalalithaa ordered the progressive closure of the 6200 TASMAC shop began with 500 such. After taking charge in March, one of the first decisions Chief Minister K Palaniswami announced was the closure of 500 more. 

 

Largest numbers of fatal road accidents in TN

A major reason for the court’s order related to the humongous increase in road accidents and quite a portion of this is attributable to drunken driving. With 150,000 fatalities, India has the largest share of deaths on road and Tamil Nadu contributes to over 10 per cent of these. A Supreme Court committee on Road Safety said that 17,218 deaths occurred on TN’s roads during 2016. 71 per cent of total accidents occur on highways that account for just a twelfth of the length of roads. Major causes are corruption and low standards in issuing driving licences and drunken driving.

Tamil Nadu was under prohibition for over three decades from 1937 when Rajaji introduced it. Successive chief ministers, including  C N Annadurai, continued with the policy. I was present covering the TN Assembly in 1971 when DMK supremo M Karunanidhi announced scrapping of prohibition to a thunderous applause from sections of legislators.

 

Huge increase in liquor income…

Tamil Nadu boasts of higher liquor sales than the other states in the south since country liquor is not made available and people are forced to buy from the state-owned TASMAC outlets. It is estimated that the state consumes more than 45 crore litres of Indian Made Foreign Liquor (IMFL) per year and its revenue from liquor sales has gradually increased over the years from Rs 3640 crore in 2003-04 to a whopping Rs 29,672 crore in 2015-16. 

Lifting of prohibition was adroitly grabbed by liquor manufacturers. Initially the major beneficiaries included Vijay Mallya’s United Spirits, Reddy Brothers’ Balaji Distilleries, M P Purushothaman’s Empee Distilleries etc., who all made millions and also liberally funded political leaders. The state nationalised the liquor sales and set up TASMAC outlets. Soon politicians, cutting across party lines, saw the Kamadhenu in the booze business and became liquor barons. These politicial suppliers thus have vested interest in the business that also offers rich scope for manipulating pricing.

The fast-growing liquor market increased the flow of funds into the government coffers and made it increasingly dependent on liquor revenue. But for every rupee the government got off the booze bottle, an estimated Rs 2 plus is lost in terms of healthcare expenses and lost productivity.

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