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SOCIO ECONOMIC FEASIBILITY STUDY ON IMPLEMENTATION OF TOTAL PROHIBITION IN TAMIL NADU, INDIA

Nandini Voice For The Deprived,  a Chennai based NGO, conducted an indepth study based on desk research and primary survey on socio economic feasibility  of implementing  total prohibition in Tamil Nadu. As part of the study, discussions were carried out with cross section of people from various walks of life.

Findings of the study are given below:

Views of the anti liquor activists

In recent time, there have been  big and genuine demand from cross section of citizens  in  Tamil Nadu for implementation of total prohibition in the state.

It is widely reported that the peace in lakhs of families, particularly in the lower income group, have been severely uprooted due to steadily increasing consumption of liquor in the state. While it is perceived that more than 40% of men folk have become liquor addicts, it is alarming to note that  the liquor habit is spreading amongst  school and college students and also among women.

The wide spread view in the state is that the liquor habit is steadily spreading,  since the government itself is selling the liquor through TASMAC shops. By this move , the government  has made the drinking habit  to be a legitimate and  acceptable activity and not undesirable activity. The sanction of law  for  liquor  consumption and widespread promotional efforts of the government, though in indirect way,  are attributed to be the main reasons for the increasing consumption of liquor in  Tamil Nadu, with serious adverse consequences.

In a welfare state, the government’s primary activity and responsibility should be focused to ensure that the citizens are enabled to live happily, peacefully and with harmony in the families and surroundings. The operation of  TASMAC by government of Tamil Nadu totally negate the objectives of the governance in a welfare state. People wonder as to what is the government for, if it’s activities itself would lead to disruption of families, cause  severe problems for the women and uproot the economy of the families by tempting the people to spend their hard earned money to buy liquor  at the cost of the necessary needs of the families.

Government’s  stand

Government of Tamil Nadu says that it accepts the need for prohibition  but it is unable to implement total prohibition in the state  due to the following reasons.

1.         Implementation of prohibition will lead to illicit liquor.

2.         Closure of TASMAC shops will result in loss of income to the level of thousands of crore of rupees to state, which would force the government  to  suspend several of its welfare measures.

Brief details on TASMAC

TASMAC  (Tamil Nadu State Marketing Ltd) was established in 1983 as a state owned enterprise with an investment of Rs.1,500 lakh from the state government and was incorporated under the Companies Act, 1956.

20 years after  the inception of TASMAC, in 2003, the retail trade of liquor was also transferred to TASMAC, with the objective of curtailing excess pricing and removing unfair trade practices in the retail trade.

TASMAC has around 27,500 employees, of whom more than 90%  are reported to be temporary employees .

Over the years,  the number of TASMAC shops in Tamil Nadu have been increased to around 6785. In addition to TASMAC liquor shops, there are many more proprietary clubs  and hotels, where liquor is served and more than 900 such licenses have been issued.

Sale of TASMAC  shops have been steadily increasing at over 15 percent per annum on average during the last 10 years.

Total  IMFL &  beer consumption in  Tamil  Nadu

Period

 (April to March)

Indian made foreign liquor

Beer

(in lakh cases)*

(in lakh cases)**

2012-13

562

307

2013-14

563

271

2014-15

552

252

 

*1 Case contains 10 bottles, **1 Case  contains 12 bottles

 

Figures do not include the sale of foreign brands like scotch whisky and wine.

 

Total sale of IMFL & beer in Tamil Nadu

Period

(April to March)

(Rupees in crore)

2012-13

24,371

2013-14

25,409

2014-15

27,824

 

The Tamil Nadu tax revenue in 2015-16 is projected to be Rs.96800 crore.  The projected revenue from TASMAC is  expected to be Rs. 29.672 crore .In addition to the states own tax revenue, the share in central taxes is expected to be Rs. 21,149.89 crore and the grants in aid from the Central Government Rs.16,376 crore.

Revenue to Tamil Nadu government in excise, sales tax from IMFL & beer sector

Period

(April to March)

  • Excise
  • Sales tax

Total

(Rupees in crore)

2012-13

9,555

12,125

21,680

2013-14

5,035

16,640

21675

2014-15

5,671

18,401

24,072

 

*           Excise paid by manufacturer at rate of Rs.125 to Rs.500 per litre of liquor; sales tax paid by consumer at 58% of its value.

The growth rate of overall tax revenue from the liquor sale  has  always been higher than the growth rate of state economy from 2004-05 onwards.

More than a quarter of the projected revenue from the state’s taxes come from TASMAC sales

Tamil Nadu Government’s view on possibility of illicit liquor

Government’s argument  that illicit liquor would become widespread due to  imposition of prohibition is unacceptable.

When  Kamaraj was the Chief Minister, Tamil Nadu has seen total implementation of prohibition with  almost entire state population not consuming liquor. There were illicit liquor even then but the offenders were convicted and punished.  In those days, people viewed the drinkers with disgust and they were looked down upon, as they were law breakers.

The failure  of   prohibition will happen only if the government machinery and police force would fail to put down corruption ruthlessly and avoid  mismanagement.

Efficiency in government machinery and police administration, without allowing any interference from political parties, would ensure that illicit liquor would be largely  wiped out.

Strategies for implementation of prohibition of TASMAC

The strategies have to be evolved considering the following factors.

1.         In the last few decades, several governments in Tamil Nadu have driven large section of people to become liquor  addicts by operating TASMAC liquor shops.

It is not possible to make the lakhs of people who have taken to liquor consumption in a big way to give up the practice all of a sudden. Therefore, introduction of prohibition has to be a gradual process, that has to be launched by strong and purposive anti liquor campaign over the next few years  and making the availability of liquor for the people scarce.

2.         In today’s condition, in the absence of TASMAC income, treasury in Tamil Nadu may suffer. The government of Tamil Nadu has to find alternate avenue for generation of around  Rs.24,000 crore per annum income after imposing total  prohibition.  Is this possible ?

Keeping the above factors in view, stage wise introduction of prohibition in part appears to be the realistic, practical and appropriate approach.

Considering the level of liquor addiction amongst people and considering the state of finances of the Tamil  Nadu government  and the fact that there is not much scope left for further imposing of taxes, the target should be to achieve 50% of prohibition from the present level in the next two years. This should be done by closing large number of TASMAC shops and restricting the supply of TASMAC liquor to 50% of the present level.

An appropriate schedule for imposition of prohibition and alternate income source is suggested below:

Period

Closure schedule for TASMAC shop

Loss of revenue for the government due to closure per annum

(Rs. in crore)

 

Alternative income source

October, 2015

10%

2400

Suspension of freebies

December, 2015

10%

2400

Suspension of freebies

March, 2016

10%

2400

Expenditure optimisation

September, 2016

10%

2400

Expenditure optimisation

December,2016

10%

2400

Prohibition fund

 

The feasibility of alternate income source is further discussed.

  1. Suspension of freebies

Successive governments in the state are reported to  have spent nearly Rs.11,500 crore on just three freebie schemes – colour television sets, laptops and household appliances.

There are two kinds of freebies. One is necessary and other one is unnecessary.

While some freebies like free rice for poor people, pension for the differently abled and elderly people and widows are necessary ,there are other schemes which are not so necessary and can be given up.

Several freebies such as following can be stopped immediately.

*           Rs.499 crore for the free saree and dhoti scheme.

*           5.5 lakh laptops to  be distributed to students free of cost at Rs.1,100 crore

*           Rs. 2000 crore for distributing free fan, mixie and grinder for 35 lakh families

*           Rs.751 crore for various marriage assistant scheme.

*           Free cycle scheme for students

 

Stoppage of the above freebies will result in saving of  around Rs.4800 crore per annum.

Expenditure optimisation possibilities

 

Between 2005 and 2013, Tamil Nadu’s expense on salaries quadrupled, from around Rs.8000 crore to Rs.34000 crore.There is  lack of efficiency  in  public expenditure. There have been loss of  revenue as tax rebates and concessions were provided  to industry and businesses.

 

Tamil Nadu government should strive to  optimise the expenditure of the state to ensure that the expenditure would be brought down atleast  by 5%, which is possible by avoiding leakage of revenue, curbing wasteful expenses and improving efficiency all round. Tamil Nadu government can save atleast Rs.4800 crore by such  expenditure optimisation exercise.

 

Prohibition fund

There are thousands of people in Tamil  Nadu who desire that prohibition should be implemented.              Tamil Nadu Government should seek co operation from such people and appeal to them to contribute voluntarily Rs.2400 crore per annum towards prohibition fund .The government should assure that the prohibition fund would be entirely used for building schools and primary health centre and running them efficiently.

Certainly, atleast  ten lakh respondents including individuals, corporate bodies, business houses would readily come forward to donate Rs.24000 each per annum or multiple of this amount towards the prohibition fund. They are sure to respond,  in the same manner as the  people respond for such calls in the event of any calamities.

Profitable utilisation of  molasses and  alcohol for value added projects

By suspension of TASMAC liquor sale, there would be surplus availability of molasses / ethyl alcohol, which can be converted to value added products by setting up number of molasses / alcohol based downstream projects.

Careful and dynamic promotion of molasses and alcohol based projects in the state can provide considerable income for the state by way of taxes and duties from molasses / ethanol based industrial projects. Apart from the other multiple benefits for the overall industrial and economic  growth of  Tamil Nadu, by way of employment generation, development of ancillary industries etc.

 

There are 27 private, 16 co operative and three public sector sugar mills which produce molasses. This molasses is supplied to several private and two co operative distilleries for the production of alcohol and spirits. Some amount of molasses had also been exported to other states in the past.

Today, there are no worthwhile molasses or ethanol based industrial projects operating  in the state and most of the ethanol production are diverted to produce Indian make foreign liquor.

 

In Tamil Nadu, around  3,30,000 hectares of area are under sugarcane cultivation and production of sugarcane is around 22 million tonne per annum.

 

 Apart from sugar, around 45 kilograms of cane molasses is produced from one tonne of sugarcane and the production of molasses can be in the region of  9.9 lakh tonnes per annum and production of ethanol can be around  2,40,000 kilo litre per annum in Tamil Nadu.

 

There are several molasses and ethyl alcohol based products which are not produced in Tamil Nadu / India and are presently being imported in large quantities. There are excellent investment opportunities for setting up downstream products from cane molasses and ethyl alcohol in   Tamil Nadu.

While there are a number of such value added derivative products, a few of such products and investment opportunities are highlighted below:

 

Derivative product

Feedstock

Indian import 
in tonne

Indian export

In tonne

Indian production

Citric acid

Molasses

65,000

Nil

Nil

L-Lysine HCl

Molasses

40,000

Nil

Nil

Acetic acid

Ethyl alcohol

712,384

Small quantity

160,000 tonne per annum

Polylactic acid

Molasses

Small quantity

Nil

Emerging biodegradable plastic with global growth of

15% per annum

Polyvinyl chloride (polymer)

Ethyl alcohol

1,241,620

Small quantity

1,367,000 tonne per annum

 

Growth rate in demand

11% per annum

 

Potential investment based on several molasses/ethyl alcohol based projects in Tamil Nadu could well be over Rs.3,000 crore.. When in operation, such projects can generate income of around Rs.1000 crore per annum to the state by way of taxes and duties.

 

While the molasses/ethyl alcohol based projects will not generate income to the government by way of taxes and duties similar to the level TASMAC liquor give, there are many positive and productive advantages that should be duly recognised and accounted for.

 

It will take two years to implement such projects in a planned manner.

 

Prognosis

The overwhelming opinion amongst people in Tamil Nadu is that the prohibition should be imposed.

 

Obviously, by launching judicious schemes and finance planning, the government of Tamil Nadu can impose prohibition in the state, without affecting its economic and industrial development plans for the state.

 

After ensuring 50% reduction in liquor consumption in the state by end 2016, Tamil Nadu government may assess the scenario in 2017 to work out the strategies for further imposition of prohibition.

 

By imposition of prohibition, here is an opportunity for Tamil Nadu to gain its rightful place in the country and become a role model for other states in India.

N.S.Venkataraman

Nandini Voice for The Deprived

nandinivoice.com

Views: 159

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