Saturday, June 30, 2012

Political Parties Policies on Liquor

Whenever I read news about liquor and fightings on liquor by different political parties, I could never understand what are they trying to achieve by that. There are different proposals by different political parties, and there are different things that were tried in the past.

Complete Prohibition

Almost all the social drinkers would be against it saying, people know what is good and what is bad, and government should not control the moral.

Mafia may increase in this case.

People may go for adulterated liquor and damage the health or life.

Establishing Liquor Shops by Auctioning

Maximum revenue to the government, since, the liquor shops are auctioned in open competition. Even in small towns, the revenue per shop is more than Rs.1 crore.

Since, the shops are paying significantly high price for the license fee, they sell liquor more than the MRP.

Because of that, not all poor people can buy. In many villages and small towns, the liquor shops give liquor as a loan, and collect the money on friday/saturday, when the people get their salaries.

Still, for few people, it is too expensive. So, they may go for adulterated liquor and damage their health and life. Some time back, in Andhra Pradesh, few people died due to adulterated liquor, and since then this issue has increased significantly.

Establishing Liquor Shops by Lottery

In this method, government fixes the license fee based on the area. If more than one participant is interested in that, then government gives the license to one applicant by lottery.

Other than the reduction in the revenue to the government and increase of the profit to the licensee, I don't see any difference when compared to auctioning.

Once the shop is established, everybody tries to get maximum income. Nobody would try to get less income, just because, they spent less money as the investment. Let's suppose, when the shop was auctioned, and somebody bought it for Rs.1 crore, and he was getting income of Rs.1.5 crore and profit of Rs.50 Lakh. Now, to the same person, if the shop is sold for Rs.50 lakh, why would he try to get income less than Rs.1.5 crore, and profit less than Rs.1 crore? If he cannot maintain the income, then he is unfit to do any business. I don't think, any liquor shop owner in A.P is unfit to do business.

Other than loss of revenue to the government, I don't think this method would have any other change when compared to auctioning.

Running Liquor Business by the Government

Since, the liquor is sold at cheaper price, many people would buy liquor and they will damage their health.

The revenue would reduce significantly, because, government sells for MRP. (Private shops sell for much higher price than the MRP.)

Selecting a policy for liquor is like, selecting a stone to break your head.

1 comment:

  1. Liquor policy is a tricky solution. On one end we have people who drink recklessly with the little money they have and screw up their health and family's situation. On other end, the government really needs the tax money it generates. Also banning it outright will only cause more illegal business, and block access to liquor for social and responsible drinkers.

    There has to be a happy medium somewhere!