ISWAI: Liquor ban is counter-productive and promotes illicit, counterfeit, and unsafe products causing health risks

Written by Taasir

Creating long-term awareness campaign on Responsible Consumption is of critical importance

* Prohibition does not solve the problem of alcohol consumption but drives the business underground

* Implementation of Liquor ban in the states of Haryana, Andhra Pradesh and Kerala have been unsuccessful

* Cost of enforcing Prohibition is substantial – Revenue loss to the state, increased dependency on Central grants

Patna, November 21, 2021: The International Spirits & Wines Association of India (ISWAI), an apex body of the premium AlcoBev sector, strongly urged the Government of Bihar to engage in a consultative and progressive policy-making process to ensure responsible alcohol consumption, instead of banning the sale and consumption of liquor in the State.

Giving a compelling reasoning on why Prohibition does not achieve its objectives but leads to larger consumption of illicit and counterfeit liquor, Ms. Nita Kapoor, Chief Executive Officer, ISWAI said, “Prohibition is counter-productive, promoting illicit, counterfeit, and unsafe products causing health risks. It also leads to loss of control over the establishments where production, sale and consumption takes place. Instead, consumption of alcohol spreads through speakeasy restaurants, middle-class neighborhoods or business districts that were formerly tightly regulated. Once there is a loss of control over the source and destination of alcohol, there can be no mechanism to find out what kind of alcohol is making its way into the marketplace; hence the occurrence of unfortunate ‘hooch tragedies’.”

At a recent high-level meeting, the Chief Minister of Bihar Mr. Nitish Kumar issued several instructions to plug the loopholes in the system in order to enforce strict measures to ban sale of liquor in the state. The review meeting was triggered due to the recent hooch tragedy in various districts of Bihar, namely Muzaffarpur, Samastipur, Gopalganj, West Champaran and East Champaran, around Diwali. Most of these districts share their borders with Uttar Pradesh, Jharkhand and Nepal from where the illegal liquor trade is thriving. According to the Bihar Police, a total of 49,900 cases have been reported in various districts of the state during the special raids conducted under the State Prohibition and Excise (Amendment) Act 2018. During the raids conducted from January 2021 to October 2021, a total of 38,72,645 litres of illicit liquor were recovered and confiscated in the state.

Emphasizing the point that prohibition leads to revenue loss to the state, Mr. Suresh Menon, Secretary-General, ISWAI, stated “On 5th April 2021, the state of Bihar completed five years of the total ban on the production, sale and consumption of liquor. Liquor sales used to be a major source of revenue for the state exchequer. In 2015-16, Bihar earned INR 4,494 core from AlcoBev – (INR 3,141.7 crore in state excise and INR 1,353 crore from VAT); after prohibition was imposed in 2016, these revenues from AlcoBev which were 17.7% of the state’s own tax revenues of INR 25,449 crore in 2015-16, dropped to zero. This entailed a substantial loss of revenue for the state government.”

Stressing that the cost of enforcing Prohibition is substantial, Ms Nita Kapoor further added that; “Besides revenue loss to the state, prohibition adversely impacts the investment climate across allied industries and increased dependency on Central grants. As per calculation based on the data from PRS State Budget document, the extend of Grants-in-aid from Centre to Bihar nearly tripled from INR 18,171 crores in 2015-16 Budgeted Estimate (BE) to INR 54,531 crores in 2021-22 BE; potentially eclipsing the revenue loss due to prohibition.”

In the past, few Indian states like Haryana, Andhra Pradesh, and Kerala had attempted banning of liquor but later repealed it. Stressing the learnings from other states, Mr. Suresh Menon, Secretary-General, ISWAI, stated, “Imposing prohibition on liquor in many Indian states has not proved to be successful. It is critical to learn from the Kerala experience, where prohibition in the AlcoBev sector led to a loss in state revenues, and a decline in national and international tourism, thereby resulting in job losses in the industry value chain, especially in the HoReCa sector. Recently the Andhra Pradesh government announced a progressive liquor policy by moving away from Prohibition to Restriction. The negative fallouts of the earlier policy had been a decline in tourism, a drop in state revenues, mushrooming of illegal, spurious products and bootleggers, increase in smuggling of liquor from neighboring states, etc.”

Stressing on a long-term solution, Ms. Nita Kapoor added; “A Progressive and Predictable Policy will encourage Premium Brand owners to implement best global practices, bring in high quality in every aspect of the manufacturing process and create economic opportunity for the state.” Adding further, Ms. Nita Kapoor said, “To address the abuse of alcohol, the policy of restriction needs to go hand in hand with a sustained long-term awareness and education campaign to build a culture of Responsible Consumption.”

ISWAI, along with its member companies, supports Indian state governments in devising a consistent and progressive alcohol policy and aims to enhance general education concerning the responsible consumption of alcoholic beverages.

About International Spirits and Wines Association of India (ISWAI):

The International Spirits and Wines Association of India (ISWAI) is the representative apex body of the premium AlcoBev sector, promoted by the multinational alcoholic beverage companies, having investments and business operations in India. Formed in 2004, ISWAI leads a focused effort to ensure Compliance, Responsible Consumption, and enhancing quality through Premiumization, leading to improved reputation of the AlcoBev sector. ISWAI is also committed to a supportive, predictable, harmonized, and progressive policy environment that enables member companies to thrive in India and build economic value for the States where they operate. ISWAI engages regularly with government representatives, policymakers, media, international organizations, industry associations, public interest groups and other stakeholders. ISWAI further aims to enhance general education concerning the responsible consumption of beverage alcohol products.

lSWAI, along with its member companies, aims to work with Indian State Governments to devise an alcohol policy that would promote a responsible drinking environment and encourage people to adopt a culture of “Drink Less and Drink Better” ( Members of ISWAI include global leaders like Bacardi, Beam Suntory, Brown Forman, Diageo, Moet Hennessy, Pernod Ricard, and William Grant & Sons.

For more information contact:

Neha Jindal, Senior Account Director, RV VeKommunicate,

Manisha Sharma, Account Director, RV VeKommunicate,

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