Ad Here  
Deming awardees galore! What the big B should offer? Low profile moves Why throw baby with bath water? An eventful week with VVIPs of Delhi How will it PAN OUT TN - so much to offer... A Fine division of responsibilities Need for radical RBI reform Welcome rains for damaged roads... Policy Makers Focus on southern TN... Well-administered State Wanted: decentralised financial system Focus on agriculture and human resources If not Tamil Nadu, where else? A gratifying record Sustainably developing manufacturing sector… An eco-friendly commute in Mysuru Trail-blazing Tamil Nadu Breaking news or breaking credibility? Two welcome measures from the chief minister... Sardar Sarovar – the seventy year itch They add lustre to Padma Awards Cleansing Indian retail In the horns of a dilemma PC please be our Santa Welcome move to widen the tax net… Skewed Economic Zones? INDIA keeps its date with destiny Weaving wealth of western Tamil Nadu Little surplus after salaries, subsidies and debt servicing Babes In the wood-RBI North block has little clue to curb inflation A blueprint for the future Need plan over the long term planning Better relations with UK... Public investments and welfare will surge A tale of two Bihar babus Jobs - Lost, Changed or Gained No groundnuts in groundnut oil! A dual GST that will protect prosperous states CSR, tech revolution and bank crisis Land, land everywhere, but... Industry can’t get it from Mars, yet South India’s 100 most valuable companies Tryst with GST Outward ho Pool energy prices Miles to go... The deluge and the several kindly souls BJP can now hasten its thrust for reforms Strategic planning the missing link Reform this licence to…kill Tax evaders’ get out of Jail-Free Card Chennai Airport-Ready for a rapid take off... Make way for Make in India... CAD and the emergency thereof Healthy finances of the Chennai Corporation Babes In the wood-RBI North block has little clue to curb inflation You too T M Krishna? Welcome Measures. Work for 10X Change Truce at Kasturi Buildings Technology and economic development should be linked The Great Fall Ganesh’s mantras Indian GST – Between extremes… A historic indirect tax reform Oh my GOLD Economy through the month Much can be done by us 1800 parties registered with EC – Less than 60 contest elections Star of the South Why (not) abolish? After all, customer is the king Sowing seeds of hope Much ado about nothing Rail-road Rajaraman Kudos to GIM organisers... MS Installed It’s raining funds for states. Really? Research for survival... When the examiner cheated...
In the horns of a dilemma
With most political parties opposed to liquor trade and with AIADMK agreeing for gradual implementation of prohibition, the Supreme Court judgment is a trigger for accelerating this. But coping with this is going to be arduous.

The Supreme Court’s order banning the sale of liquor close to national and state highways from 01 April will impact 60 per cent of the 5200 outlets of the state-run Tamil Nadu State Marketing Corporation (TASMAC).  This will have serious revenue implications for the state which gets a third of its total state tax income from liquor business. And this comes at a time when the state is already reeling under a severe resource crunch.

It is not as if this was a sudden development. Over a year ago, in the campaign for the elections to the state assembly, several opposition parties demanded the re-introduction of prohibition. There was widespread support from several sections of citizens, particularly women. The latter complained of the breadwinner squandering his wages on liquor leaving the family in distress. Gauging the mood, then chief minister Jayalalithaa ordered the progressive closure of the 6200 TASMAC shop began with 500 such. After taking charge in March, one of the first decisions Chief Minister K Palaniswami announced was the closure of 500 more. 


Largest numbers of fatal road accidents in TN

A major reason for the court’s order related to the humongous increase in road accidents and quite a portion of this is attributable to drunken driving. With 150,000 fatalities, India has the largest share of deaths on road and Tamil Nadu contributes to over 10 per cent of these. A Supreme Court committee on Road Safety said that 17,218 deaths occurred on TN’s roads during 2016. 71 per cent of total accidents occur on highways that account for just a twelfth of the length of roads. Major causes are corruption and low standards in issuing driving licences and drunken driving.

Tamil Nadu was under prohibition for over three decades from 1937 when Rajaji introduced it. Successive chief ministers, including  C N Annadurai, continued with the policy. I was present covering the TN Assembly in 1971 when DMK supremo M Karunanidhi announced scrapping of prohibition to a thunderous applause from sections of legislators.


Huge increase in liquor income…

Tamil Nadu boasts of higher liquor sales than the other states in the south since country liquor is not made available and people are forced to buy from the state-owned TASMAC outlets. It is estimated that the state consumes more than 45 crore litres of Indian Made Foreign Liquor (IMFL) per year and its revenue from liquor sales has gradually increased over the years from Rs 3640 crore in 2003-04 to a whopping Rs 29,672 crore in 2015-16. 

Lifting of prohibition was adroitly grabbed by liquor manufacturers. Initially the major beneficiaries included Vijay Mallya’s United Spirits, Reddy Brothers’ Balaji Distilleries, M P Purushothaman’s Empee Distilleries etc., who all made millions and also liberally funded political leaders. The state nationalised the liquor sales and set up TASMAC outlets. Soon politicians, cutting across party lines, saw the Kamadhenu in the booze business and became liquor barons. These politicial suppliers thus have vested interest in the business that also offers rich scope for manipulating pricing.

The fast-growing liquor market increased the flow of funds into the government coffers and made it increasingly dependent on liquor revenue. But for every rupee the government got off the booze bottle, an estimated Rs 2 plus is lost in terms of healthcare expenses and lost productivity.

1 2
Author :
Reported On :
Sector :
Shoulder :
IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
Read more
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
S-15, Industrial Estate,
Chennai - 600 032.
PHONE: +91 44 22501236