Liquor sale: TN gives it a shot despite spike in COVID cases, move deplored

There is an eerie similarity between the number of COVID-19 cases in Tamil Nadu and the state’s revenue from liquor sales over the years. Both have been witnessing a spike. While the state recorded a 16-per cent increase in the revenue during 2018-19, it clocked a slightly higher surge (19 per cent) in the number of COVID-19 cases on Wednesday (May 6). In this scenario, the state government’s decision to open liquor shops has come as a shock to many.

Having been the major revenue generator for the state, Tamil Nadu State Marketing Corporation (TASMAC) had earned around ₹90 crore every day. In fact, it had generated revenue of ₹31,157 crore during 2018-19. However, due to the COVID-19 lockdown TASMAC shops and bars remained shut for the last 40 days. So, the government has lost more than ₹3,000 crore.

After the government announced its decision to open the liquor shops, a section of the society has opposed the move saying it would escalate the spread of the disease if social distancing was not followed there. However, the government was quick to find a reason. It said people in the districts bordering other states would travel there to buy liquor.

Though it seems to control the movement of the people, the government’s main objective is to generate revenue, which could be used for its COVID-19 relief measures, say experts. But following the opposition, the government has decided not to open the shops in Chennai, which has seen a spike in the number of new cases. In other parts of the state, the outlets will operate between 11 am and 5 pm, with bars shut.

In a bid to control the crowd, the government has hiked the price of liquor. However, the increase is minimal compared to the rise in Delhi and Maharashtra. The retail price of the normal variant (180 ml) has been increased by ₹10, while medium and premium varieties (180 ml) have witnessed a hike of ₹20.

Time for alternative source

The government’s decision has not sat right with activists. “Most of the state’s own tax revenue comes from petrol, diesel and alcohol. While the government cannot increase the consumption of petrol and diesel during the lockdown, it has increased the price of liquor,” says Ranga Prasad, a member of the Satta Panchayat Iyakkam, a Chennai-based NGO. “It will affect the affordability of liquor and the crowd will be controlled.”

The NGO had always been demanding the state to find another source of revenue, instead of TASMAC. The government had said it had not been depending on the revenue from TASMAC. But it has now realised that it could not run without TASMAC, says Prasad. In this scenario, the government cannot ban liquor, but can at least find an alternative source of revenue, he says.

“The TASMAC works on three levels. At the top level, some politicians run breweries. At the middle level, the government needs to earn revenue. At the bottom, functionaries of political parties have obtained contracts to run bars. In order to satisfy the first two levels, the government has decided to open the outlets,” says Prasad.

Changing narratives

Tamil Nadu has an interesting history over the prohibition of liquor. In 1937, the then Chief Minister C Rajagopalachari first banned the sale of liquor. It was first implemented in Salem, the native of current Chief Minister Edappadi K Palaniswami.

After three decades, the then Chief Minister M Karunanidhi resumed the sale of liquor in 1971, citing the same reason as Palaniswami in a polished manner. He asked why should Tamil Nadu miss out on the revenue from liquor when other states continued to get profited.

After splitting from the DMK in 1972, the AIADMK came heavily on liquor sales and called for its prohibition. Due to the pressure from the opposition, the DMK government announced a ban on sales of liquor in 1974. Interestingly, the DMK currently opposes the government’s decision to open TASMAC shops.

During his second term as Chief Minister, the same MG Ramachandran, who had opposed the sale of liquor a decade ago, lifted the ban in 1981. He allowed the manufacture and sale of both country-made and foreign-made liquor. It came as a shock to the people as MGR, as an actor, never encouraged the consumption of alcohol in his films. Especially, women in rural areas opposed his decision.

“The AIADMK needed a platform to convey their concern for the welfare of the poor, women and children. It is possible that the midday meal scheme was an attempt to win back the sympathies of this electorate group,” writes former bureaucrat S Narayan in his book The Dravidian Years.

In 1983, the AIADMK launched the TASMAC and brought under it the wholesale of Indian-made foreign liquor. Exactly 20 years later, the then Chief Minister J Jayalalithaa brought the retail sales under the control of the TASMAC, which now has a monopoly on the alcohol industry.

The government had once been using the revenue generated by TASMAC in running its welfare schemes like mid-day meals. But over the years TASMAC began minting money, even during disasters like Chennai floods in 2015. “When people had been struggling with a power outage due to rain, many shops sold liquor in candlelight,” says Prasad.

‘No moral hindrance’

The moral question of whether a government could run on revenue from liquor should neither arise during a disaster nor generally, economist J Jeyaranjan tells The Federal.

“The Constitution has given some powers to states. Liquor sales are one of the major revenue components. Others are petroleum products, stamp duty, registration and transportation. All these contribute to 63 per cent of the tax revenue in developed states like Tamil Nadu,” says Jeyaranjan.

“The devolution from union tax revenue is just 37 per cent for Tamil Nadu. So there is nothing wrong in the state opening TASMAC shops,” he says.

While the state has already borrowed loans to a tune of ₹8,000 crore and the Centre has almost given nothing to us, the state relies heavily on liquor sales, says Jeyaranjan. “We have many central-sponsored schemes in the concurrent list. The amount given to the scheme cannot be spent on any other things. Those funds must be used during the time of crisis under exceptional clause,” he says.