NCAER: Bihar booze ban hasn’t worked; lift it, fund development work

The paper by a team of economists led by Ratna Sahay said an end to prohibition can help the state increase its tax revenue by 14-15% while reducing expenditure on enforcement

NEW DELHI: A new paper by NCAER has proposed lifting prohibition in Bihar to generate resources for financing development and capital expenditure. It argued prohibition has not reduced crime against women and legal drinking has shifted to the consumption of illegal alcohol and drugs.The paper by a team of economists led by Ratna Sahay said an end to prohibition can help the state increase its tax revenue by 14-15% while reducing expenditure on enforcement. It also argued for more central transfers to states to help meet flood-control activities.”Overall, available evidence doesn’t indicate a broad-based reduction in crimes against women following prohibition. At the same time, the prohibition regime has been accompanied by concerns regarding expansion of illicit liquor trade, increased enforcement challenges and corruption, and the growing use of alternative intoxicants, including illicit drugs,” the paper said, while noting a significant rise in illegal liquor trade. Presented at India Policy Forum on Friday.After returning to office on the promise of prohibition, Nitish Kumar had imposed a ban on consumption and sale of liquor in one of the most stringent regimes in the country.While the paper credits Kumar’s tenure as CM for restoring law and order and getting Bihar back on the development path, it said the state still lags several other states in revenue mobilisation and depends on transfers from the Centre.

The paper identified six priority areas for the state: gaps in education, gaps in health, gaps in governance and law and order, recurring floods and disasters, the missing private sector, and gender discrimination and violence. To achieve its goals, it suggested higher capex, lower subsidies, raising resources and getting more resources from the Centre.It noted that Bihar’s debt burden at 39% of state GDP is higher than both high- and low-income groups, with the exception of Punjab (47%) and Bengal, which is similar. “Raising state revenues is insufficient to finance the reforms, given the state’s limited taxing capacity. Additional transfers from the Centre are needed, depending on the reform,” the paper said.