The Indian Liquor Industry Prohibition Story

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Case Details:

Case Code : BECG010
Case Length : 08 Pages
Period : 1970 - 2001
Pub. Date : 2002
Teaching Note : Available
Organization : T-Series, Super Cassettes, HMV, Venus
Industry : Media, Entertainment & Information
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"States shall endeavor to bring about prohibition of consumption of intoxicating drinks except for medicinal purposes."

- Article 47, Constitution of India.

"The industry is not threatened by prohibition as we are aware that it does not stay for long."

- A liquor industry source in 1998.

The Politics of Liquor

In 1996, in the north Indian state of Haryana, the Haryana Vikas Party (HVP) promised to make it illegal to buy, sell, consume or produce alcohol in the state if it were elected to the state assembly.1 The opposing parties criticized the HVP for trying to gain political mileage out of a sensitive issue like liquor prohibition. Despite the criticism, HVP won the elections and its leader Bansi Lal carried out the party's promise within minutes of becoming the Chief Minister (CM).

Over the next year, the ban cost the state treasury Rs 12 billion in excise revenue and led to a loss of 20,000 jobs in brewing, distilling and retailing of alcoholic drinks.

In addition, 40,000 truckers, farmers and bottle producers experienced a substantial decrease in their earnings.

The state police filed 98,699 cases involving about 100,000 people caught intoxicated or in possession of liquor.

Over 13 lakh bottles were seized and 7,000 vehicles were impounded.

The state also saw an alarming increase in deaths, resulting from the consumption of spurious liquor by poor people.

To offset the loss of revenue, the government raised taxes and fees for various state-provided services - power tariff were increased by 10-50%, bus fares by 25%, and the petrol sales tax by 3%.

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