Andhra curtails liquor shop timing, additional tax results in price hike

In a first step towards total prohibition, the Andhra Pradesh government on Tuesday (October 1) took over the retail liquor trade, curtailed the timings of liquor shops and imposed an additional tax on the Indian Made Foreign Liquor (IMFL) brands.

Following the Tamil Nadu model, the state-owned Andhra Pradesh State Beverages Corporation Limited (APSBCL) will run all the 3,500 liquor shops in the state as part of the new excise policy that came into effect from Tuesday (October 1).

The government had earlier brought down the number of liquor outlets from 4,380 to 3,500 and banned the consumption of alcohol on the premises of the retail stores. The plan is to phase out liquor shops over the next four years and impose total prohibition by 2024, in tune with the election promise of the YSR Congress Party.

From now onwards, the liquor shops will be open for only nine hours — 11 am to 8 pm. The government has recruited 3,500 supervisors and 8,033 salesmen to run these outlets while 678 police constables will be recruited soon in view of the shortage of the excise staff.

Additional tax

Under the new excise policy, an Additional Retail Excise Tax (ARET) has been imposed across the board on all IMFL brands, including beer, wine and ready-to-drink varieties.

With the new tax, the price of a 90 ml bottle of IMFL will go up by ₹10, while the cost of a 750 ml bottle will increase by ₹80 and that of one and two litre bottles will cost an extra ₹250. The cost of a 330 ml beer will also increase by ₹10 and that of 650 ml by ₹20.

The new rules also stipulate that liquor shops should not be located within 100 metres of a place of public worship, educational institution or a hospital. The shops should not be visible from national or state highways.

In July, the Jagan Mohan Reddy government had launched a crackdown on “belt shops”, the illegal extensions of the licensed retail outlets which used to serve as bars. The government had also announced the allocation of ₹500 crore for setting up of de-addiction centres across the state.

Also read | Andhra takes first step towards liquor ban, but will it work?

Belt shops had become a big menace, particularly in rural areas, and are seen as a major cause for the growing alcohol addiction. “Till now, 2,872 cases have been registered and 2,928 people taken into custody for operating belt shops. We will take firm steps to stamp out illicit liquor,” said State Excise Minister Narayana Swamy.

In the next phase, restrictions would be imposed on the sale of alcohol. It would be confined to only five-star hotels and other premium restaurants. Chief Minister Jagan Mohan Reddy has also asked the civil society group Jana Chaitanya Vedika to prepare a roadmap to implement the dry law.

As per official sources, liquor sales came down by 15% between July and September after the new policy was announced. The state had earned excise revenue of ₹5,789 crore in 2017-18 while it was just ₹3,839 crore in 2014-15, the first year after the bifurcation of the state.

The imposition of prohibition in a phased manner was one of the key pre-election promises made by Jagan. During the election campaign, he had even said that he will not seek votes again in the next election if he fails to deliver on his promise.

Doubts over feasibility

Given the experiences of other states in the past, total prohibition has never worked in the country. Earlier attempts of implementation of similar dry laws in other states have only been unsuccessful.

In 1966, Haryana had banned liquor but had to revoke the ban later in 1998. Similarly, the united Andhra Pradesh’s tryst with total prohibition in 1994 had barely lasted three years. Kerala too had banned alcohol in 2014, but a change of government in 2017 saw the policy being reversed. Though Bihar introduced prohibition in 2015, its implementation in the state is now faltering.

It would be a daunting task for the Jagan Mohan Reddy government to implement the dry law in a state that is reeling under severe financial crunch and struggling to attract investments. Besides, the flow of spurious liquor and smuggling could pose another major challenge for the government.

Also read | Prohibition in revenue-hit Andhra could mean windfall for Telangana

Experts too have expressed doubts over the feasibility of the dry law in a state that is struggling to mobilise resources to fund its populist schemes.

“We have seen how prohibition policy has failed in several states across the country. At a time when we are aggressively seeking investments into the residuary state and desperately want investors to come in, we cannot afford such regressive policies,” said K Ramesh Babu, a senior analyst.

A failed experiment

Andhra Pradesh’s tryst with dry law too has been a spectacular failure in the past.

An anti-arrack agitation started by a group of women in Dubbaka village in the coastal district of Nellore in 1990 had soon snowballed into a statewide social movement. And in the run-up to the 1994 elections, it had become a dominant issue. TDP founder N T Rama Rao, who was then in the opposition, was moved by the plight of women spearheading the agitation and he had promised to enforce a prohibition law if his party was voted to power.

With a dramatic flourish, Rao had announced that the first file he would sign as Chief Minister would be on banning liquor in the state. And, he had kept his promise. Within minutes of taking oath as the Chief Minister for a second time on January 16, 1995, he had announced total prohibition in the state. As a result, four breweries and 24 distilleries producing potable liquor were shut and the state had lost a revenue of ₹800 crore in the first year.

Also read | Jagan’s ambitious ‘Amma Vodi’ aims to uplift Andhra, but faces hurdles

Later, some exemptions were chalked out and those willing to purchase alcohol from special outlets run by the state breweries corporation had to produce a “doctor’s certificate” to buy alcohol.

However, the move backfired and state government soon had to grapple with rampant smuggling and free flow of illicit liquor, besides massive loss to the state exchequer.

Driven against the wall by administrative problems, financial worries and increased smuggling, the Chandrababu Naidu government finally decided to do away with the prohibition in 1997. And the Andhra Pradesh Prohibition (Amendment) Bill was passed, ending the dry law from April 1, 1997. However, the ban on arrack still continues.