The country’s largest liquor company United Spirits has taken a big hit with the imposition of prohibition in Bihar. As a result, it has been forced to close down all its distilleries in the State. In an interview with BusinessLine, Abanti Sankaranarayanan, Business Head – Luxury and Corporate Relations, United Spirits, shares the company’s views on prohibition and the larger impact on the State’s economy.
As a global player in the alcohol-beverages industry, how do you view the events that have transpired in some states over the last few months, with regard to the ban on liquor consumption?
Prohibition is a ‘lazy’ and ineffective way of addressing alcohol misuse and leads to consumption of illicit alcohol. Prohibition has invariably been rolled back by most of the states that have imposed it. Alcohol misuse is higher among people who drink country liquor which was rightly recognised by the Bihar government when it initially announced its ban on country liquor only. By extending it to a complete ban on all alcohol, unfortunately the Bihar government has moved the needle backwards – encouraging people to consume illicit alcohol, which recently resulted in 13 deaths in Gopalganj.
Kerala Excise Minister TP Ramakrishnan has admitted in the state assembly that the use of drugs has risen. Statistics shows that liquor ban has resulted in decrease in foreign tourists visiting the State to 6 per cent in 2015. Domestic tourist arrivals have also declined to 6.6 per cent in 2015 from 8.6 per cent in 2010.
Bihar is one of the latest states to impose prohibition. Can you tell us what does it entail if the ban is violated?
The prohibition which came into effect from April 5, 2016, prescribes stringent punishment – including capital punishment – to those manufacturing or trading in illicit liquor.
While the initial ban only covered country liquor, a week later it was extended to ‘Indian Made Foreign Liquor’. A revised draconian bill that was later passed sought to punish all adults in a family for liquor consumption by an individual member, or if liquor were recovered from the house. The changes to the bill also include making any premises liable for confiscation if found storing or preparing liquor and being used as a place for consumption. The penalty for violation of the act will result in a minimum eight-year jail term extendable to 10 years with a fine of up to ₹10 lakh.
What is the impact for United Spirits in Bihar following the imposition of prohibition?
USL has had to stop bottling at its Bihar plant; hundreds of employees have lost their jobs. Prohibition in Bihar has had a material impact of 3 per cent to the total growth of our business as declared in our first quarter results.
How much of revenue will Bihar have to forego because of the ban?
Not just numerous people in the industry but also including ancillary industries such as trucking, retail, packaging and so on, are left unemployed overnight. Revenue of about ₹6,000 crore that the State government could have earned from legitimate manufacturers is lost.
Has the Bihar Government interacted with the liquor majors following the liquor ban?
The Bihar government has come out with a notification recently to encourage bottling of alcohol in the State for export to other States by waiving the export fees is surprising and contrarian – on the one hand, the government prohibits alcohol– on the other hand, it wants manufacturers to not close production units. We were given to understand that prohibition in Bihar is being driven by a very “principled view”.
This latest move indicates that the Bihar government believes that those living in the state should not consume alcohol, but it is fine for people in other states! That’s very contradictory.