Thou shalt not drink – the liquor ban story!

A blanket ban on liquor vends alongside highways in India as a result of Supreme Court verdicts has dramatically changed industry dynamics.

Thou shalt not drink – the liquor ban story!

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No more liquor on Highways! The Supreme Court of India, on December 15, 2016, (in State of Tamil Nadu Rep. By Its Secretary Home, Prohibition & Excise Dept & Ors v K.Balu) ordered closure of all liquor shops along national and state highways if they were within 500 meters from the edge of highways. Then came the March 31 modification order in the same case. The court directed govts. to ‘cease and desist’ from issuing excise licenses after March 31. The court decision comes in view of the vast majority of fatal road accidents caused due to drunken driving. Figures show that road accidents due to drunken driving account for 4% of the total.

Liquor ban – an old story : Presently, complete prohibition is enforced in Gujarat, Bihar, Nagaland and the union territory of Lakshadweep. Few other states like Manipur, Maharashtra and Kerala have a partial prohibition. States with prohibition have failed to fully control the consumption and sale of liquor. Liquor flows uninterruptedly into these states from neighboring states where prohibition is not enforced.

The Constitutional and Moral story : The Directive Principles of State Policy in our Constitution, and the many SC judgements that followed later, have laid various precedents and rules for the present situation. We analyse them one by one now.

Deep Dive? Check more reading resources here. Download Accidents Data pdf here (go to Infrastructure tab)

Economic impact : The judgment will have a huge social and economic impact. At a time when the government is promoting tourism of all kinds, including medical tourism, the liquor ban is sure to hit the hospitality and tourism industry the most.

Travel and tourism sector : includes restaurants, bars and liquor vends, employs more people than most sectors in the country. The food service sector alone provides direct employment to 5.8 million people, and indirect employment to another 7.5 to 8.5 million people, which together will rise further by 2021, making it the largest employer in the country.

Revenue implications for States : It will also have serious revenue implications for the states. Liquor is the leading contributor to states’ revenue collections. One-fifth of Tamil Nadu’s revenue comes from the sale of liquor. Maharashtra earns about Rs. 20,000 crore revenue from the liquor industry.

Judicial overreach? A lot of experts were exasperated trying to gauge the implications for industry and livelihoods. Some even termed it an attack on the Executive's domain. Read a full Bodhi on Judiciary-Executive tussle in India, here

Illegal sale of liquor and crime : According to an industry body estimate, the collective revenue loss from the ban would be around Rs. 50,000 crore. The uncertainty of India’s business climate will also deter investment in these sectors. Illegal liquor vends are also likely to flourish along highways.

Do check out exams-focussed Confidence Booster series of learning resources, here!

Let's take a look at some facts and figures to better understand the situation.