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Kerala Faces Partial Prohibition in Phases

Posted: Friday, 22 August 2014 10:36

Kerala Faces Partial Prohibition in Phases

Aug 22: If the proposal of the Congress-led United Democratic Front government in Kerala takes a concrete shape, the State faces a total prohibition after 10 years of a weaning away period, resulting in the annual loss of Rs. 8500 crores (Rs. 85 billion), but hopefully the existing bars and wine parlours will continue to be allowed to function

A 2-hour meeting that took place at Chief Minister Oommen Chandy’s official residence to discuss the excise policy yesterday (Thursday) took this bold decision in a bid to accommodate the growing voices against liquor consumption in the biggest liquor consuming State of India. "The UDF has come out with a unanimous decision for a liquor ban in the state to achieve total prohibition,'' the chief minister said after the meeting. The UDF recommendation will be shortly ratified by the state cabinet following which it would be conveyed to the Kerala High Court as a policy decision.

The only exception will be that the five star hotels will be allowed to sell liquor through the bar licenses. There are currently 23 such properties in Kerala. Fortunately for the wine drinkers, although the excise policy draft is quiet on the status of 111 beer/wine parlours in the state, sources in the UDF said they will be allowed to function, according to a report in the TOI

As a first step, 418 bars whose license were not renewed on April1 as they had failed to upgrade the required facilities, won't have their licenses renewed. Licenses of 312 functioning bars in the state won't be renewed after March 31, 2015. The government will also seek legal opinion on terminating the licenses of these bars immediately.

The 334 outlets of the Beverages Corporation (Bevco) which sells liquor in the retail sector, will also be phased out during the next 10 years by closing 10%. These outlets don't sell liquor on the first day of every month which is currently observed as a dry day. From now on, they will also be closed on Sundays in a bid to reduce the availability.

Interestingly, other States like Tamil Nadu have also announced the grandiose plans of introducing prohibition but balked due to the sizable chunk of revenues through taxation. Apart from the doubtful efficacy of total prohibition (Haryana found it impossible to administer, Gujarat is known to have an active network of bootleggers and carriers), Chief Minister Chandy risks putting more pressure on an already sluggish economy with the state losing around Rs 8,500 Crore in excise duty and other taxes- more than one-third of the state government's annual plan outlay. Loss to the Tourism and IT industry - the two strong contributors to the economy of the state, have not been quantified yet.

It is not clear whether the strong demand by V.M. Sudheeran, the President of the KPCC-Kerala Pradesh Congress Committee, is because he is a staunch supporter of the Prohibition or whether it is a political step by the Congress Party to pre-empt any move by the ruling BJP in some other states, but it also enjoys the support of other constituents of the Congress-led coalition U.D.F.

The experiment, if it may be called that, is likely to fail as it has in other states, but it is a bold step and if the beer/wine parlours are allowed to exist with a remote possibly of even allowing more to open, is bold and worth watching-not only because of the practical difficulties in administering it but also the loss to the exchequer. Those who propose it and those who oppose it will have to carry the cross and pay much higher taxes to sustain it - the BJP government can hardly be expected to offer the financial largesse.

And the tourists can start preparing to say good-bye to visiting God's own country.

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