- The country is riddled with too many paradoxes is not unexpected at all as the vast topography, different cultures, traditions, languages, practices, innumerable dialects, and several such variations make what India is all about, a vibrant and lively throbbing nation. Ushering in unity amongst the traditionally divergent conundrums is no mean task. Not for nothing it is often mentioned whilst addressing India with the moniker unity in diversity. As you are aware, our political landscape is no less vibrant than the people these parties represent. If there are few national political parties of repute, there are many regional parties with equally significant influences locally as well. Democratic governance is complemented nicely by federalism.
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- Consequently, the policies differ from one state to another on matters of varying degrees of revenue generation for the exchequer is also quite common. As you are aware, the excise policy essays an extremely important role in not only ensuring the much-required revenue generation occurs on expected lines but also provides ample opportunities for the state governments to allocate funds to people-friendly schemes. Interestingly, we know how our political leaders loathe to miss out on consolidating their respective vote banks by regularly announcing populist measures to attract a prospective electorate. Of late, the women’s electorate has become an important segment that cannot be wished away just like that.
- It’s no secret that the majority of women abhor alcohol and any political party announcing its intention to introduce prohibition would invariably get their backing. We all know how lopsided and illogical such prohibition acts have proved to be over the years. Not only that but there are also liquor policies too which are often twisted and tweaked for reasons best known to the government concerned. One such instance can be seen in Delhi’s retail liquor trade which is in chaos thanks to the AAP government’s policy flip-flop. A new policy introduced in 2021 that saw state withdrawal from the retail trade was characterized by e-commerce-like discounts but also litigation and allegations of corruption.
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- Consequently, less than a year after the new policy, the AAP government will switch back to the old state-dominated retail trade. Ironically, that system’s problem was revenue leakage. Mind you, the political subtext to the flip-flop has AAP and BJP as the main protagonists. The underlying themes, however, play out nationally. Note that India’s alcohol market is characterized by two features. First, demand for alcohol seems impervious to economic downturns. Second, we know how alcohol catalyzes moralizing in India. No wonder, these two features lead to alcohol’s unique political economy.
- It’s highly taxed and along with fuel makes up about 24% of the state’s own tax base. Make no mistake, prohibition is the most extreme form of distortion. The recent hooch tragedy in Gujarat showed again how a ban merely drives demand underground. Given its fiscal importance, alcohol regulation is crying for reforms. Thus, its imperative to usher in a sober regulatory system and 100% private retail for alcohol. Treating liquor consumption as a fiscal imperative will clear unnecessary populist measures to a great extent.
