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Liquor policy needs to beat his license raj hangover


Long before Aam Aadmi Party (AAP) leader Manish Sisodia got caught up in an alleged liquor policy scam, when nearly every market in India was a market for vendors, generations of Indians grew up informed by Tintin comics – instead of the web – to find that alcohol can make you dizzy, sure, even wobbly if you get too tipsy, but doesn’t exactly make us see double. However, before Georges Prosper Remi (1907–1983), better known as Hergé, could be accused of fake news, a postmodern reading of his drunken twin images came to the rescue. If we didn’t take them literally, we found, we could suppress the idea that liquor does indeed give many things two faces. Government policy, for example. Or the politics of it, for that matter. So if Hergé’s comics need a sensitivity scrub, a la Dahl, it’s not about letting kids grow up expecting this magic potion to work pluralistic miracles. Today, after all, this industry is a marvel of federal pluralism, with liquor banned by some states and a rapidly swelling tide in others. It’s also a story of supply bustle, with a heady brew of good intentions and hidden interests that have kept the rules muddled in a time capsule (or keg) of licensed raj vintage.

It wasn’t always like that. Back in the day, when Mahatma Gandhi loomed large over our polity, we had a clear conscience as our decision-maker. We learned soon enough that liquor was an age-restricted intoxicant and best kept out of reach, even for nominal adults, because it was addictive and bad for health. And while a liberal view called for it to be treated as an adult’s choice, the domestic realities of harm to others could not be ignored. If whole families could be undone by drink, then a free market for it would be folly. So states had to intervene. Supply clamps were their reflex response. Gandhi’s home state of Gujarat banned it completely, as did several others such as Bihar, where it proved popular with women. It’s another matter that ghost vendors thrive in these states, enabled by the internet and enriched by a shadowy market of lucrative markups. Most Indian states are not dry, but they are restricting outlets and using other controls to squeeze supply. Permits that are kept in short supply are prized by private players looking for rent, some armed with bribe budgets to get them. Alcohol controlled in this way prevents demand from being met as it freely would, even though the scarcity caused by a tight liquor regime keeps prices high, which usually favors tax authorities for the picking of income. The more a policy forces tipplers to pay on post-bottler margins, the greater the rents to be received – and premiums to be secretly shared. Both models have masks of morality, both give politicians power over profits by blocking supply, and both require reforms to reduce state discretion over where the money goes.

As a polity, if not an economy, we need to stop our Janus-faced approach to booze. For starters, it should fall under GST and our social safety goals should be met by policies that don’t distort prices and tilt profits. AAP had been making cleaning noises and trying to turn the liquor distribution in Delhi upside down. Whether the party sought a loosening of clamps or a funnel for slush money can only be guessed at, given how little we know about Sisodia’s case details. A seething cauldron of pre-2024 politics has cast a haze over the arrest of the AAP leader. Be that as it may, we still need to get over our raj hangover – that hangover that keeps seller markets in a good mood – and push for a rule rethink.

Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.