Liquor Policy in India

Context

High taxes and excessive licensing in the liquor industry contribute to corruption and financial burdens on consumers.

About

• The Directive Principles of State Policy (Article 47) inspire the prohibition of alcohol consumption, except for medicinal purposes, aiming to protect citizens’ health. 
• While not legally enforceable, these principles guide state action. 
• Additionally, alcohol regulation falls under the authority of country legislatures according to the Seventh Schedule, taking into account various laws throughout states, from prohibition to private sale.

Distribution of Power on Liquor Control in India

• Central Government:

• • • Sets hints for import duties on foreign liquor.
    • Formulates national-level rules regarding alcohol advertising and marketing and advertising.

• State Governments:
• • Liquor falls under the State List (List II) of the Seventh Schedule
  • Impose state-specific excise duties and taxes on liquor sales.
• Issue licenses for liquor import and distribution in the country.
  • Set guidelines on liquor import, along with accredited operating hours for liquor shops and bars.
  • Introduce prohibition legal guidelines in positive states (e.g., Gujarat and Bihar).
  • Allow liquor import through government-owned stores (e.g., TASMAC in Tamil Nadu).
• Implement online liquor sales and home delivery services (e.g., Maharashtra and Delhi).

Approaches to alcohol policy range across states

• Revenue-Driven Policies: States like Haryana and Delhi prioritize sales from alcohol sales, leading to the considerable availability of liquor outlets.
• Socio-cultural Factors: Gujarat continues prohibition due to cultural and historical reasons when Bihar has prohibition because of socio-economic factors.
• Government Control for Safety: Tamil Nadu regulates alcohol sales through its State Marketing Corporation to enhance safety, in particular in reaction to beyond hooch tragedies.

What is the Delhi liquor policy scam?

• The Delhi Liquor Scam entails allegations of corruption and favouritism in the implementation of Delhi’s Excise Policy from 2021 to 2022. The coverage aimed to reform the liquor region through introducing personal companies, however accusations declare it favoured certain organizations with waivers, charge discounts, and more than one licenses. 
• The AAP government denies any wrongdoing, bringing up extended sales just like policies in Punjab. However, the policy faced barriers, including resistance from bureaucrats and the LG’s directive to halt implementation, leading to its withdrawal.

Issues with Alcohol Policies in India

• Revenue vs. Health Priorities: Revenue awareness overshadows health concerns. Kerala’s rollback of partial prohibition (2018) for economic reasons highlights warfare
• Dependence of States on revenue from liquor import: According to reviews, it has been observed that, in most states, around 15 to 30 in step with cent of the revenue comes from liquor.
  • E.g., Karnataka, Uttar Pradesh, Punjab, and West Bengal closely rely upon excise duty from alcohol, contributing over 20% to their own tax sales.
• Inconsistent State Policies: Haryana’s attempts at prohibition failed because of problems in controlling illegal distillation and bootlegging, leading to fatalities.
  • Currently, there are five states (Bihar, Gujarat, Lakshadweep, Nagaland, and Mizoram) with total prohibition and a few more with partial prohibition.
• Weak Enforcement of Regulations: For, Alcohol companies flout advertising bans with little government intervention, like during major events inclusive of the cricket World Cup.
• Exclusion from GST: States are reluctant to encompass alcohol in GST due to sales worries, preferring character control over regulations. Inclusion should simplify taxation and align it with other products.
• Excessive Taxation: High home and customs duties exceeding 200% and a 150%, respectively, burden consumers financially.
• Impact on Health: Consumers opt for cheaper, decrease-great alcohol due to excessive taxes, increasing fitness risks, especially amongst lower-quality agencies.
  • Hooch tragedies, wherein illicitly brewed alcohol ends in deaths or contamination, occur periodically.
• Government Monopoly in Sales: Current policies cause authorities monopolies in liquor import, doubtlessly fostering corruption and hindering private organizations.

Actionable steps to deal with alcohol policy problems

• Include Liquor in GST: Simplify taxation via bringing liquor beneath GST, much like cigarettes, for a streamlined tax process.
• Encourage Private Distribution: Transition from government monopolies to personal liquor distribution, regulated for protection and age regulations, to lessen corruption and promote business diversity.
• Reform Licensing Policies: Simplify licensing processes for liquor import in public spaces to reduce bureaucratic boundaries and foster a more fit commercial enterprise environment.
• National Health-Focused Policy: Develop a country wide alcohol coverage prioritizing public health over revenue, aligned with the WHO’s recommendation of minimizing alcohol intake.
• Legislative Action on Advertising: Enforce stricter regulations to prohibit alcohol advertising and control surrogate marketing by liquor organizations.
• Balance Revenue and Health: Find a balanced technique to alcohol policy that considers each sales technology and public health effect without compromising either.
• Open Discussion: Promote open, non-judgmental discussions approximately alcohol use, difficult conventional perspectives and addressing religious views to foster informed selection-making.

Source: The Indian Express

UPSC Mains Practice Question

Q.Discuss the ongoing issue regarding the authority of states to regulate and impose excise duty on the alcohol industry. How might the outcome impact state-federal relations and the economy?

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