If you drink alcohol in Bihar, you could end up in jail for seven years. And if you are found making and selling it, you could be hung to death.

On March 30, the Nitish Kumar government amended Bihar's excise laws to give teeth to the alcohol ban in the state. The Bihar Excise (Amendment) Bill, 2016, was supported by all political parties. As part of the prohibition drive, starting April 1, the sale and purchase of all country liquor is banned in the state.

Already, all 17 privately-owned country liquor factories have been sealed by the government. All private shops selling alcohol will also be closed down. The government says within a year there will be complete prohibition in Bihar. The state would become the third state in India to impose prohibition after Gujarat and Nagaland.

It all began in the run-up to the assembly elections in November last year. In response to a woman voter, Chief Minister Nitish Kumar declared he would impose complete prohibition in Bihar if he returns to power.

Subsequently, when reporters in New Delhi asked him what the wine shops would do, Kumar replied, “They will sell milk.”

Back in Patna when told that the alcohol ban would drive the business underground, he said, “I will impose capital punishment for those who drink or trade illegally.”

Such statements coming from an elected politician took you back to the prohibition debates in the Constituent Assembly that framed India’s constitution.

In the debates, a politician from Kolhapur in Maharashtra, BH Khardekar, argued against prohibition. The discussion was not just about alcohol but about an India they envisaged – a liberal India where citizens can be free and honest.

Khardekar quoted the editor of the Times of India: “There are things other than liquor that goes to one’s head, and power is one of them.”

After announcing a complete ban on alcohol, Kumar later tweaked the policy to restrict the ban on alcohol to country liquor. From April 1, all country liquor will be banned and stocks destroyed, but branded alcohol will continue to be sold in 650 government shops.

Economic impact

All 17 private factories of country liquor have been sealed even before the due date. With about 350 workers in each factory, 10,000 workers will lose their jobs. Six thousand private liquor shops have to close down, according to the Excise Department. Thirty thousand salesmen will have to go home. Some 6,000 eateries and small restaurants might also wind up business. Even the sale of food products that are basic accompaniments with alcohol like peanuts and papads will see a decline.

No surprise then, there is anger against the ban.

In Patna, at a liquor shop on Boring Canal Road, a customer, DP Tripathi, said, “When all the drugs like afeem, ganja, heroine are available then why stop alcohol, which is legal? People will use other intoxicants.”

The shop salesman Ranjit Kumar explained that country liquor has 60% spirit and 40% water, while branded alcohol is refined further and has 42.8% spirit.

Five salesmen work in each shop and get Rs 10,000 salary. Now they will lose their jobs. “We will not sell your milk Nitishji,” Kumar said. “Ghar jayenge, chori karenge ya Dilli jayenge. I will go home or steal or leave for Delhi."

At Patna’s New Market, inside a small bar, or daaru ka adda as it is called, Jitendar Kumar, the salesman, explained, “I don’t fear Nitish Kumar. I can tell him on his face that he is harming the poor, not helping them. A 200 ml country liquor costs Rs 25. Now even the poor will have to pay Rs 100 for the 200 ml branded alcohol. But drink they will. They will give less money to their wives.”

Malti Devi, a widow who earns Rs 1,000 a day by selling food at the eatery, said, “I will close it down. Chawal banake GPO golambar par phenkna to nahin na hai." Should I make rice to throw away at GPO roundabout?

State monopoly

An alcohol trader has opened a petrol pump in the US. Another executive has written on his Facebook page that he will become an arms trader.

The alcohol traders are not organised but most see Nawal Singh as their leader. In the business since 1979, when prohibition imposed by Chief Minister Karpoori Thakur ended, Singh said, “There are six cases in the Patna High Court challenging the government's decision.”

“Article 47 gives the state the power to ban alcohol but article 47 does not say it should be taken away from private hands and allow the State to run it,” he added. “Further, under section 22 of the Excise Act, the exclusive privilege (to make and sell alcohol) is for A or B (individuals). It does not say exclusive privilege is for the state.”

Singh explained the way Nitish Kumar gradually worked to make the liquor business a state monopoly. In 2006, he set up the Bihar State Beverages Corporation Limited and abolished all private wholesalers and distributors.

“Under this 15% profit was to be given to retailers and 10% to BSBCL. The alcohol companies began selling directly to BSBCL,” Singh said. “Other states get a profit of just 2%, so I filed a writ petition in Patna High Court, which brought down the state's profit share to 5%."

Subsequently, BSBCL gave a donation to the Chief Minister’s Relief Fund, for which they got an income tax notice. "They brought down their profits to two per cent,” said Singh. "But now they want the profit share of retailers as well. Two per cent plus 15 per cent, or 17 per cent profits from alcohol will go to the State.”

Singh claimed that under the previous regime led by Rashtriya Janata Dal's Laloo Prasad Yadav, "the excise income from alcohol was Rs 272 crore on 8.15% of total tax revenue". In 2014-'15, he claimed this had shot up to nearly Rs 4,000 crore, or 15.6% of total tax revenue.

"If Biharis have become alcoholic then Nitish Kumar is responsible,” he said.

However, according to the National Sample Survey data, the per capita expenditure on alcohol per month in Bihar is only Rs 15.50 as against Rs 173 in undivided Andhra Pradesh, Rs 80.85 in Kerala and Rs 72 in Punjab. If the per capita expenditure is seen in relation to per capita income, then Bihar is placed at number 12 among 29 states.

Industry and revenues

Bihar is a poor state with little industry. Is it wise for any government to shut down the few industries that exist?

Dr Prakash Chandra is the owner of Globus Spirits, a country liquor factory in Patna, and he explained how they feel cheated by Bihar government.

“I have invested Rs 18 crore in just this plant alone," he said. "I employ 350 employees here. I have three such plants. We were given contracts for six years but in just one year we have been sealed." Not only have all 17 country liquor factories been sealed by the Bihar government, some have not been paid for the liquor supplied to BSBCL, Chandra claimed.

“I set this up because it was Nitish Kumar’s dream to give the people of Bihar genuine and safe alcohol," he added.

Revenue shortfall

The Bihar government plans complete prohibition within a year. To meet their revenue losses, they have already increased the value added tax on various products. For petrol and high speed diesel, the VAT goes up from 20% to 30%. Textile products costing more than Rs 500 per metre will be taxed at an extra 5%, and so would saris above Rs 2,000. The VAT on dry fruit, branded and preserved snacks made of wheat flour, refined flour, suji or besan will be 13.5%.

Yet, the increase in taxes on other products might not be enough to make up for the revenue shortfall, and Bihar’s finance officials are worried as they have to implement new Pay Commission recommendations. Of great concern is Bihar’s fiscal deficit. At 6.3% of state GDP in 2013-'14, this is way above the national average of 2.5% for most states.

As I drove home, Patna’s popular Radio jockey Anjali played the Yo Yo Honey Singh number:

Char botal vodka,
Kam mera roz ka,
Na mujhko koi roke,
Na kisi ne roka.

There was no news on the private FM radio. Radio news is banned, just like country liquor.