Clearing the air, licensed liquor stores within municipal limits excluded from ban

Context

The Supreme Court has clarified that its ban on the sale of liquor does not apply to licensed outlets that fall within municipal limits

What happened?

• On December 15, 2016, the apex court had imposed the ban on selling of liquor within a distance of 500 metres along all National and State highways.

Why the ban was imposed?

• The Supreme court had imposed the ban after hearing a plea that claimed that nearly 1.42 lakh people died in road accidents every year
• Drunk driving is a potent cause of fatalities and injuries in road accidents
• The Constitution preserves and protects the right to life as an over-arching Constitutional value

Which states are exempted from the ban?

• The top court had exempted the states of Himachal Pradesh, Meghalaya and Sikkim and places with populations less than 20,000 from the restriction.
• The supreme court had also relaxed the norms for Arunachal Pradesh and the Andaman and Nicobar Islands.

What are the economic implications of this ban?

• The move could lead to states losing overall tax revenue of Rs 50,000 crore, restaurants and pubs taking a hit of Rs 10,000-15,000 crore and 100,000 people going out of work
• State revenue losses are estimated at Rs 50,000 crore, besides job losses of over a lakh
• The top three — United SpiritsBSE 3.78 %, Pernod Ricard and Allied Blenders, which account for 60% of overall sales — had zero growth by volume in the April-December period.
• Liquor sales in India slowed to 0.4% in the first nine months of the financial year, the slowest growth in a market that’s been expanding rapidly since 2001, with a compounded annual growth rate of over 12% in the decade to 2011.

Why the ban is good

• Bans serve some immediate benefits to their users.
• In politics, be it US or Bihar, the ‘right-intention’ serves the purpose of the initiative rather than the ultimate result of the act.
• In India, the common mass is generally occasional drinkers. Curtailing alcohol supply will in hand curtail their drinking behavior.
• In politics, ban of alcohol solves an array of problems for many households. Thus, it consolidates some segment of their voter base.
• There are seen to be communal and domestic violence cases which seem to abate after a ban.
• For example, in Bihar, people especially women are talking about its positive effect and how their lives have changed after Chief Minister Nitish Kumar’s historic decision.

Why the ban is not good

• According to psychologist Jack Brehm, humans hate obstruction of personal freedom. Accordingly, they get into a rebellious state of mind and regain their freedom through illegal affairs.
• The undercover liquor supply makes its way for new problems like spurious liquor, gang wars and sale of other narcotic substances.
• Economically, following the Supreme Court, the country has been facing problems for clubs, hotels and restaurants.
• In Chennai, around 120 bars attached to clubs have remained closed since April 1, and the loss to the industry is estimated to be ₹600 crores, according to BenzeSaravanan, founder, Tamil Nadu Bar and Club Owners Association.
• Large hotel chains are not the only ones affected by the ban.
• Food and beverage revenues have declined by 30-40% since the court order, and specialty restaurants have been badly hit.
• In a nutshell, in the two months since the court ruling, the hospitality industry in Chennai has lost an estimated ₹3,000 crores.
• With hardly any progress being made on resolving the issue, the hospitality industry says business in hotels on arterial roads has been crippled.
• This is directly affecting their employees too.

Conclusions

• Just like Portugal, ban on alcohol is to be treated as a public health issue and not as a criminal issue and ban it.
• Over the last few years, bars and pubs in the city have become more responsible
• They have been engaging their patrons in discussions about drunk driving.
• At a time when the economy is going through a rough patch, and consumer pace has declined, the new norms will hit the hotels that survive on food and beverage sales even harder.
• GST however, will bring some relief to these hotels with its input credit.
• Drinking isfueled by upper-caste hypocrisy, a complex mix of religious guilt and bigotry.