Government Control Over Liquor Shops: A Question of Fiscal Dependence and Public Health
State governments in India are increasingly reliant on alcohol revenue to fund their budgets. This dependence raises ethical and health concerns. This article delves into the relationship between government control of liquor shops and its fiscal impact, exploring the socio-economic and health implications of this reliance.
The Revenue Equation
Roughly one-fifth of State government budgets are funded by alcohol taxes, a share that continues to rise year by year ("The Economic Times"). For instance, in Tamil Nadu, the Tamil Nadu State Marketing Corporation (Tasmac) alone contributed Rs 21800 crore to the government's coffers from alcohol sales. In Kerala, 22 per cent of the government's revenue comes from the alcohol industry, with excise and commercial taxes generating close to Rs 8000 crore ("The Economic Times").
Fiscal Dependence and Its Consequences
The fiscal dependence on alcohol revenue is seen as unhealthy and disproportionate, according to K.K. George, the chairman of the Centre for Socio-Economic and Environmental Studies in Kochi. It is argued that this reliance hinders the search for other revenue sources, with a significant portion of the revenue originating from the working class ("The Economic Times").
The Case of Kerala
In Kerala, the Excise revenue from alcohol accounts for about 22-23 per cent of the state's revenue, an increase from 15 per cent in the past quarter-century. The differential between the retail price and the landed cost of alcohol is vast, with a large portion of this difference going to the government through taxes and charges ("The Economic Times").
Equity and Public Health Concerns
Equity in alcohol taxation is a key issue. A daily-wage worker paying a 600 per cent tax on his drink is considered unjust. The government's claim that higher liquor prices will deter the poor from drinking is seen as absurd. Even with higher prices, the habitual drinker will still find a way to buy his drink, at the cost of reduced household nutrition and healthcare ("The Economic Times").
Subsidizing Alcohol for the Poor
To address these issues, Sebastian proposes supplying subsidized alcohol through the public distribution system to those living below the poverty line. This would both reduce alcohol consumption and ensure that the poor do not bear an unjust burden ("The Economic Times").
The Growing Market for Alcohol
Over a fifth of the world's alcohol production is consumed in India, predominantly unrecorded and illicit. However, the market for industrialized liquor (IZMFL) and imported liquors is growing rapidly, with the liquor industry expanding at a rate of 30 per cent annually. By 2015, liquor consumption is expected to reach about 20 billion litres, with a total market value of Rs 1.5 lakh crore ("The Economic Times").
Health Implications and Campaigns Against Addiction
India accounts for the largest whisky market in the world, with demand increasing for imported whisky and wine. Economic growth, urbanization, changing lifestyles, and social norms are all contributing to an increase in drinking habits among young people. However, at least a third of drinkers fall into the category of 'hazardous drinkers,' a problematic category ("The Economic Times"). Prohibition is not seen as a solution, and a strong and sustained public health campaign is recommended to address alcoholism issues ("The Economic Times").
Conclusion
The growing dependence of state governments on alcohol revenue is a complex issue that requires careful consideration of fiscal and public health implications. Managing this dependency without compromising public welfare and ethical standards remains a significant challenge for policy-makers.