LESLIE DO REGO FYBA B.
Gujarat has a sumptuary law in force that proscribes the manufacture, storage, sale and consumption of alcoholic beverages.
Prohibition has been in place ever since statehood in 1960, originally in the purview of the Bombay Prohibition Act, 1949, but now under the Gujarat Prohibition Act, 2011, following several amendments. The latest version, which followed 150 deaths caused by hooch in Ahmedabad in 2009, includes the death penalty for those found guilty of making and selling spurious liquor. The law allows for temporary and long-term drinking permits to foreigners, NRIs and tourists, with outlets and purchase limits specified. A resident can get a permit only on health grounds. At special economic zones, the government allows consumption against three-year permits.(service, 2014)
There are many ways in which we can analyse this issue, through different disciplines which give us greater perspective and gives us a better idea of the issue viewed from different angles.
First, let me shed some light on the Political aspects of this law:
Appeasement of the masses: When looking at a law or a bill, one has to ask the simple question: Why was this proposed? In this case, it’s very simple. The people in power want to appease the people of Gujarat. An alcohol-free state encourages a family state. When I say that I mean parents would be happy to raise their children in a state where it would be impossible for them to fall prey to underage drinking and all the harms that come with it. It becomes an environment which is conducive for children growing up healthy and it keeps the vice of alcohol away. Also, this law has been in existence for over 60 years. In that time, the culture of Gujarat has changed and it has been cemented in the values of the people and families. For now, people are so used to the idea of an alcohol-free state that they may not be willing to make way for a more progressive state of things, in which the laws are relaxed. The conservative population will do anything to maintain this Law. This is where the politics comes into play. Politicians, being pro-Prohibition or anti-prohibition internally, will project themselves as Pro-prohibition in order to appease the masses and gain their support.
Vote Buying: This concept is different from Appeasement. Instead of the people following politicians, it’s the other way around in Vote Buying. Politicians provide incentive for people to support them. The reason I’ve brought this concept up in my paper is because of study on the reality of things in Gujarat. There has been evidence of politicians or members from political parties offering alcohol to the people. People have been visited at their homes for these kind of exchanges. It is estimated that liquor demand increases manifold during the election season as many parties resort to supplying liquor to people anticipating favourable voting. This sort of under the table activity is an act of vote buying and it unfortunately occurs which is why I’ve put it into this paper.
Booze for ballot: While no police official was willing to be quoted on record about the flow of liquor to specific pockets in the state ahead of elections, sources said that ‘liquor for vote’ was a reality in several places. During polls, the quantum of seizures made by the Election Commission remains higher than that of the police (Times of India, 2014). However, due to the impending fear of seizures and consequent losses, the transportation of liquor from other states to Gujarat falls during elections. The bootleggers often increase their stock of goods before the poll date and release them gradually at a larger profit.
Bribery and monetary gain:
Theweekly payoffs flow continuously in government as well as police departments from the bottom to the top. Regular raids on liquor dens and bootleggers, and arrest and imprisonment of offenders, are mere drama which provide the police with some good publicity. For, the truth is that the liquor mafias ensure that families of arrested or jailed bootleggers are not short of money while the hafta collection continues. This has been a regular feature of prohibition in Gujarat from the beginning. It is estimated that the money involved in illicit liquor business is almost equal to the loss in excise and customs duty of the state exchequer. (dna, 2014)
So it is glaringly clear that the higher-ups or the people in power benefit from the support of a large percentage of the people for keeping the law in place but also benefit from the under-the-table deals that are rampant in the State with respect to alcohol laws.
Demonstration Effect: Demonstration effects are effects on thebehaviorof individuals caused by observation of the actions of others and their consequences. The term is particularly used inpolitical scienceandsociologyto describe the fact that developments in one place will often act as a catalyst in another place (Wikipedia, 2014). If we look at the law optimistically, we see the behaviour of people as shown by the demonstration effect. Taking the law on prohibition, when alcohol is banned, most of the people stop consuming it. On seeing the behaviour of the people in question, others may stop as well, maybe people from outside Gujarat. So the law does not affect only the citizens of Gujarat. Through the demonstration effect we can see that the alcohol consumption of people from neighbouring states may well decreases thanks to the law.
Consumption of spurious alcohol: It is an observed phenomenon in modern studies of human behaviour that when something is taken away from a person, their want for that object increases. We can equate it with the prohibition law. With the ban of alcohol, the demand for it does not go away. In the state of Gujarat a large portion of the population still demand alcohol. This demand is met by bootlegging activities (which I will elaborate on later). However, since the law prohibits the selling of alcoholic substances, the bootlegged liquor that one receives is at a higher price. The people of impoverished circumstances simply cannot afford the good stuff. But the demand remains. Therefore, the poor population resorts to alcohol of an inferior quality. This is often spurious alcohol which is incredibly harmful to the body and can also prove fatal.
On 7 July 2009, ten people died inBehrampuraafter drinking spurious liquor.The liquor was brewed in the house of Arvind Solanki, who also died after consuming the liquor. The death toll rose to 43 next dayand crossed 120 by July 12.276 people were admitted in various hospitals with nearly 100 of them inintensive care units.More than 1000 litres of hooch containingmethanolwas brought to AhmedabadfromMohammadabad. (Wikipedia, 2014)
When one thinks of the economic analysis of Prohibition one’s mind goes to revenue. The revenue of a state under prohibition is significantly less than that of an anti-Prohibition state, obviously. The widespread consumption and purchase of alcohol by the masses provides huge income for the state through sale and tax.
But, when we delve deeper into this issue, we see the many aspects of economics that comes into play.
The economics of Prohibition and Addiction
The relatively inelastic demand for alcohol by an alcoholic:
To start off, I’ll explain in a few lines what the elasticity of demand is. It is basically the behaviour of a consumer’s demand with a corresponding change in price. It shows the relationship between the two and measures the extent to which the consumer’s demand changes. When we use the term relatively inelastic demand what we’re saying is the change in price doesn’t have a very big effect on the demand of the consumer. This is usually observed in the demand for essential goods. Therefore, when analysing the demand for alcohol of an alcoholic, he is psychologically and sometimes physically dependant on alcohol. Thus even when the price goes higher he still demands alcohol. So the bootleggers in a way have a direct impact on the welfare of the people, controlled with the prices that they charge for bootlegged alcohol. Also, the sever dependency of an alcoholic on alcohol can drive him into poverty due to his inelastic demand for alcohol and the previously mentioned high prices of bootlegged alcohol. We can also see this form the point of view of the sellers of liquor. Experience has shown that stricter the law against drinking, higher is the price of illegal liquor and greater are the profits.
The existence of a huge black market of alcohol in the state of Gujarat:
As I’ve said before, bootlegging in Gujarat is rampant. It is safe to say that even with the blanket ban, anybody who wants to can have access to alcohol and its products.
There are over 300 listed bootleggers in Ahmedabad and over 3,500 in Gujarat. Half of them smuggle IMFL while the rest brew country-made liquor. As part of an unwritten understanding between bootleggers and low-ranking policemen, bootleggers are booked in small-time cases from time to time and sent to jail for short durations. A senior police official says that politicians-from the panchayat to the state levels-are greater beneficiaries of this illicit business.
According to an unofficial estimate, the Ahmedabad police getRs.80 lakh toRs.1 crore as monthly bribes from bootleggers. It is believed that the Gujarat police get aroundRs.100 crore as bribes from bootleggers. Vadodara police getRs.50 lakh each year, Surat police getRs.70 lakh andRs.25 lakh goes to the Rajkot police. There have been instances where police officials themselves have created bootleggers to earn illicit money from them.
Around a dozen major bootleggers operating from the border areas of Gujarat churn out an annual turnover of overRs.1,500 crore by selling illicit Indian made foreign liquor (IMFL) in the state. Hundreds of smaller IMFL and country-made liquor bootleggers operate with impunity under the very noses of the Gujarat police and politicians. With the prohibition law becoming a farce, each year the state Government losesRs.3,000 crore in excise duty due to bootlegging.
According to state intelligence sources, bootlegger Kailash Rathi’s gang alone pushes 10 trucks of IMFL worthRs.1 crore into Gujarat each day. Rathi, who was arrested in Ahmedabad recently, operated from Sanchor, Rajasthan. His annual turnover is pegged atRs.300 crore. Ramesh Patel alias Michael’s turnover from selling illicit liquor is as much as Rathi’s. Patel operates out of Daman on the south Gujarat border. His brother is a district panchayat chief in Daman.
That the police are involved in bootlegging is evident from the suspension of an Ahmedabad police inspector for accepting a bribe ofRs.20 lakh from Nagdan Gadhvi, one of Gujarat’s most active liquor smugglers. (Indiatoday.intoday.in, 2014)
So the numbers don’t lie. Gujarat ropes in a huge amount of revenue from bootlegging. But unfortunately, Gujarat does not gain anything. In other states, through various taxes the State has a piece of the pie of this revenue. However, due to the ban, all the money brought in because of alcohol is black money which results in the loss of possible income of thousands of crores of rupees for the exchequer.
Increased price of Alcohol:
It is a common concept in economics that when supply goes down, price goes up. Now in a State which has a policy of prohibition, it is obvious that the supply falls dramatically. Since, again, it is a state under Prohibition, there can be no regulation in prices. The sellers of alcohol can freely decide the prices of the products they sell and the customers are powerless and have no choice but to accept these prices. And they are forced to pay these prices for their daily fix.
Policy Efficacy and Section 4:
The avoidance of alcohol consumption can be looked at as a noble cause. However, the government should not have the right to force it upon people. We elect the government to protect us and serve us for the good of the country. The attempt at legislating what is moral should not be encouraged. I feel that this law should be repealed. It is a law which is over 60 years old and is a hindrance to the advancement of India on a global scale. There are many direct losses due to this law. The state loses thousands of crores of excise duty which, in turn, has to be recovered by making other goods and services more expensive. Gujarat’s government has estimated that it loses Rs 30 Billion ($ 615 Million, ˆ 441 Million, ? 379 Million) a year in excise revenues from prohibition, hinting at the true magnitude of the state’s underground alcohol trade (1). Several other Indian states have tried prohibition in the past, but all except Gujarat have abandoned it. Gujarat is trying hard to promote itself as a global investment destination and a tourist hub. For both these industries, the ban on alcohol has an adverse effect. Indians are ok with the hypocrisy of routinely breaking the law. Many foreigners are not.
Foreign tourists do not find it exciting or normal to have bootlegged alcohol. Gujarat’s beach destinations, for instance, will never thrive unless the alcohol policy is lifted. Tourism creates jobs. With this law in place, we are preventing employment to thousands of Gujarat’s youth.
Also, even as an investment destination, this policy isn’t helping Gujarat. There is no global finance city – be it London, New York, Hong Kong, Tokyo, Singapore, Shanghai, Seoul or Mumbai — where alcohol is banned. World businessmen don’t wish to live in a place where they are doing something illegal when they attend a party. If Gujarat is serious about becoming a world class business destination, the need of the hour is to benchmark its laws to these locations.
Looking at it from an economic point of view, even then, I feel it is imperative to repeal the law. As I’ve said above, Gujarat cannot hope to become a global financial hub if this law remains. The massive increase in revenue if the law is repealed can go a long way in improving the conditions in Gujarat and can finance a number of social welfare schemes.
To end, I say that taking steps to address social problems such as alcoholism are welcome. But prohibition, especially if implemented in bits and pieces, may not serve its purpose.
The Government should endeavour to educate people about the perils of excess alcohol consumption. An outright ban impacts not only people with a drinking problem, but also those who see alcohol as a recreational beverage and social lubricant.
dna, (2014).The punch of liquor lies in prohibition by Gujarat govt | Latest News & Updates at Daily News & Analysis. http://www.dnaindia.com/analysis/report-the-punch-of-liquor-lies-in-prohibition-by-gujarat-govt-1626224
The Times of India, (2014).In dry Gujarat, booze demand soars before polls; EC’s largest liquor seizure in India was made in state – The Times of India.http://timesofindia.indiatimes.com/news/In-dry-Gujarat-booze-demand-soars-before-polls-ECs-largest-liquor-seizure-in-India-was-made-in-state/articleshow/34223925.cms
service, E. (2014).Prohibition: How Gujarat and other states fared. [online] The Financial Express. Available at: http://archive.financialexpress.com/news/prohibition-how-gujarat-and-other-states-fared/1283150
J Indian Acad Forensic Med. Jan- March 2012, Vol. 34, No. 1
Indiatoday.intoday.in, (2014).The price of Prohibition : NATION, News – India Today. [online] Available at: http://indiatoday.intoday.in/story/illicit-liquor-business-thrives-in-gujarat/1/130913.html [Accessed 29 Nov. 2014].
Wikipedia, (2014).2009 Gujarat alcohol poisonings. [online] http://en.wikipedia.org/wiki/2009_Gujarat_alcohol_poisonings
Wikipedia, (2014).Demonstration effect. [online] http://en.wikipedia.org/wiki/Demonstration_effect