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