Prohibition-bound Andhra to take up retail liquor trade à la Tamil Nadu

After promising to impose total prohibition in a phased manner over the next five years, the YSR Congress Party government in Andhra Pradesh is planning to follow the Tamil Nadu model of excise policy and take over retail liquor trade as a first step.

The government is now in the process of formulating a new excise policy to regulate the sale and consumption of liquor. The new policy, to come into force from October 1 this year, will pave way for the government to run the wine shops.

Prohibition was one of the key poll promises of the YSRCP which stormed to power in the April 11 elections. However, the dry law will be implemented in a phased manner. As part of the plan, the government wants to prune the number of retail wine shops by 25 per cent and restrict the hours of liquor sale.

According to official sources, the liquor outlets will be asked to down their shutters by 6 pm.

The government wants to run the wine shops all by itself and provide four jobs per shop in a bid to temporarily address unemployment in the state. The excise officials are working out a system where one supervisor will head each shop, with three salesmen.

“We have drawn up plans to do it in a phased manner so that total prohibition can come into effect by 2024,” the sources said.

Crackdown on unauthorised bars

In the first phase, the government has ordered an immediate ban on ‘belt shops’, the unauthorised bars being run by the licensed retail liquor outlets in the state. The belt shops have become a big menace, particularly in rural areas, and are seen as a major cause for growing addiction to alcohol.

Last year, the excise officials had registered cases against 12,700 ‘belt shops’ and arrested more than 12,850 people.

There are over 4,380 wine shops and about 800 bars in the state. The excise revenue, which stood at ₹3,839 crore in 2014-15, rose to ₹5,789.67 crore in 2017-18.

In the next phase, restrictions would be imposed on the sale of alcohol. It will be confined to five-star hotels and other premium restaurants. These phases will also be supported by de-addiction and awareness programmes.

The government is likely to entrust the state-owned Beverages Corporation with the task of selling liquor, on the lines of Tamil Nadu policy. This will not only make it easier for the government to implement a phased ban but would also help in cracking down on ‘belt shops’.

Another idea is to restrict the hours of sale. At present, the retail outlets are allowed to sell liquor from 10 am to 10 pm. It is likely to be brought down to eight business hours and all the shops will be asked to close by 6 pm.

“The objective of the new policy is to help the poor come out of the clutches of addiction. It would help if the sales are restricted,” an official said.

After the government recently announced extension of the present policy by three more months till September 30, over 10 per cent of the wine shops have chosen not to renew their licences. The government’s prohibition policy and the dwindling profit margins could have been the reason for their decision.

Doubts over feasibility

At a time when Andhra Pradesh is facing bifurcation blues and moaning under huge revenue deficit burden, imposing prohibition would further squeeze the revenues, besides throwing up other challenges like flow of spurious liquor and smuggling.

After Telangana was carved out of Andhra Pradesh in 2014, the residuary Andhra Pradesh started its journey with a revenue deficit of ₹16,000 crore. It now earns around ₹6,000 crore from excise revenue. There are serious doubts over the financial viability of the prohibition policy.

Moreover, the experience of several states shows that the dry law can never be successful. Haryana had banned liquor in 1996, but had to revoke it in 1998. Similarly, the combined Andhra Pradesh’s tryst with total prohibition in 1994 barely lasted three years. Kerala banned alcohol in 2014, but a change of government in 2017 saw the policy being reversed.

Emotional appeal

During the recent election campaign, YSRCP president YS Jagan Mohan Reddy often told the gatherings that he would not seek their votes again in the next election if he fails to deliver on his promise of total prohibition by 2024.

However, the experts doubt the feasibility of the dry law in a state that is struggling to mobilise resources to fund 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,” noted economist Kutumbha Rao said.

Failed experiment

Andhra Pradesh’s tryst with dry law was a spectacular failure in the past. An anti-arrack agitation started by a group of women at Dubbaka village in the coastal district of Nellore in 1990 soon snowballed into a state-wide social movement. It became a dominant issue in the run up to the 1994 elections.

Telugu Desham Party’s founder NT Rama Rao, who was then in the opposition, was moved by the plight of women spearheading the agitation and promised prohibition if his party was voted to power. And, with a dramatic flourish, he had announced that the first file he would sign as chief minister would be on banning liquor.

He kept his promise. Within minutes of taking oath as chief minister for a second time on January 16, 1995, he announced total prohibition in the state. As a result, four breweries and 24 distilleries producing potable liquor were closed down and the state lost a revenue of ₹800 crore in the first year.

Later, some exemptions were made. The tipplers had to produce a “doctor’s certificate” to buy alcohol from special outlets run by the state breweries corporation. A ‘permit’ would cost ₹5,000 for individuals and ₹50,000 for owners of bars or ‘permit rooms’ as they were called.

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

Investors put off

One of the negative fallout of the prohibition policy was that the potential investors were put off by it. “The prohibition policy was a total failure. It only led to an increase in bootlegging,” said Jannat Hussain who was the prohibition commissioner at that time.

“Andhra Pradesh has borders with as many as five states – Maharashtra, Karnataka, Madhya Pradesh, Odisha and Tamil Nadu. How can any government prevent smuggling of liquor into the state?” he wondered.

Naidu bites the bullet

Driven against the wall by administrative problems, financial worries and increased smuggling, the Chandrababu Naidu government finally decided to do away with the prohibition.

The AP Prohibition (Amendment) Bill was passed, ending the dry law from April 1, 1997. However, the ban on arrack still continues.

“Despite our best efforts, the prohibition-related offenses, particularly illicit distillation and smuggling, have been steadily increasing in the state. The government has come to the painful conclusion that the Prohibition Act of 1995 needed to be modified to bring it in tune with ground realities,” Naidu had told the Assembly while introducing the legislation to lift the prohibition.

“Liquor sales fetch an income of nearly ₹3,000 crore per annum now, and this can be spent for improving the lot of the poor,” he had said.