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Indian School of Business

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ISB314

May 26, 2022

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Philip Zerrillo | Rajshree Shukla

ALCOHOL PROHIBITION IN BIHAR: A POLICY DILEMMA

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INTRODUCTION

It was January 2020. The chief advisor to the chief minister (CM) of Bihar, India, had just completed a
long meeting with the cabinet members to revisit the state’s policy on alcohol. Bihar had previously
enforced a complete alcohol prohibition in April 2016 by amending the State Excise Act, 19151 and
replacing the State Prohibition Act, 1938,2 much to the relief of the women in Bihar. However, as the
new year’s budget approached and the Indian economy’s growth rate had slowed, the chief advisor’s
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team needed to take a fresh look at whether the prohibition was worth the effort or not.

While announcing the ban in April 2016, the CM affirmed that his decision to impose complete
prohibition in the state was aimed at helping women, who he felt were the worst affected. “Women
are suffering more than anyone else due to increasing liquor consumption,” he said.3
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Barely six months into it, in November 2016, there was growing speculation about whether such a
policy could be sustained long-term, catapulted by advertisements posted by the excise department
seeking public opinion on the new law. The CM promptly dismissed all the rumors and reiterated his
commitment to the cause, saying, “Prohibition has been enforced and will continue with all strength.”
He further stated that the government was merely gathering suggestions until November 12, 2016, to
make the policy more inclusive and “non-draconian.”4
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1 An act to amend and re-enact the excise law in Bihar and Orissa relating to the import, export, transport, manufacture,
possession, and sale of certain kinds of liquor and intoxicating drugs.
2 An act to bring about the prohibition—except for medicinal, scientific, industrial, or suchlike purposes—of the production,

manufacture, possession, export, import, transport, purchase, sale, and consumption of liquor and intoxicating drugs in
Bihar.
3 India Today Web Desk. ( April 7,2016). What led to an early liquor ban in Bihar? Why did it fail earlier? India Today.

https://www.indiatoday.in/fyi/story/liquor-ban-bihar-nitish-kumar-dry-state-316617-2016-04-06
4 Press Trust of India (PTI). ( November 2,2016). Nitish Kumar rules out any dilution in prohibition law. The Economic Times.
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https://economictimes.indiatimes.com/news/politics-and-nation/nitish-kumar-rules-out-any-dilution-in-prohibition-
law/articleshow/55209827.cms

Professor Philip Zerrillo and Rajshree Shukla prepared this case solely as a basis for class discussion. This case is not intended
to serve as an endorsement, a source of primary data, or an illustration of effective or ineffective management. This case
was developed under the aegis of the Centre for Learning and Management Practice, ISB.

Copyright @ 2022 Indian School of Business. The publication may not be digitised, photocopied, or otherwise reproduced,
posted or transmitted, without the permission of the Indian School of Business.

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of copyright. Permissions@hbsp.harvard.edu or 617.783.7860
 ISB314

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While certain population subgroups reported positive results since the ban was enforced, others were

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very vocal in their complaints. Moreover, the effort and expense of enacting total prohibition in the
state needed a thorough review.

ALCOHOL CONSUMPTION AROUND THE WORLD

Alcohol consumption differs in each country, based on its laws, cultural norms, religion, lifestyle

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choices, etc. In most societies, moderation was deemed acceptable. However, excessive alcohol
consumption has been frowned upon and linked to several negative consequences, with its impact on
physical and mental health, socioeconomic well-being, alcohol-related crimes and road accidents, etc.,
in nearly every country. This has led to many governments resorting to regulating the sale, supply, and
consumption of alcohol across the globe in varying degrees. In addition, many governments have
chosen to limit consumption by increasing substance-related taxes. Increased taxes or penalties and
fines for misuses, such as drunk driving or public intoxication, serve as both an economic disincentive

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for consumption and a tax base to offset consumption-related costs. As per reports,5 in 2017, 107
million people were estimated to have an alcohol use disorder globally, which caused mental and
physical health problems. Alcohol as a risk factor caused 2.8 million premature deaths in 2017, of
which almost three quarters were younger than 70 years and 28% were younger than 50 years.

Alcohol consumption worldwide had risen steadily in the last two decades. A World Health
Organization (WHO) report 6 stated that while alcohol consumption remained rather stable in the
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African, American, and Eastern Mediterranean regions, Europe saw the sharpest decline from 12.3
liters per capita in 2005 to 9.8 liters in 2016. Even though the maximum dip was seen in the formerly
highest consuming nations such as Russia, Moldova, and Belarus, alcohol consumption decreased in
almost three-fourths of all countries in Europe. Notably, alcohol consumption increased the most in
the middle- and low-income regions, such as China, India, and Vietnam.
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Social Drinking, Compulsive Drinking, and Addiction

Alcohol consumption in India

Compared to global statistics, the average per-capita intake of alcohol in India had not reached
alarming levels, but increased consumption was a pervasive trend and one that was growing. As per
the global status report on alcohol and health 2018, 7 total alcohol per-capita consumption in the
world’s population over 15 years of age rose from 5.5 liters of pure alcohol in 2005 to 6.4 liters in
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2010. It was still at 6.4 liters in 2016, but this was characterized by changing trends in different parts
of the world (see Exhibit 1).

By comparison, Indians consumed 2.4 liters of alcohol in 2005, which increased to 4.3 liters in 2010
and scaled up to 5.7 liters in 2016. Stated differently, India’s alcohol consumption had risen from 43%
of the world average to over 89%. With growing urbanization and more disposable income in their
hands, the country’s younger population increasingly engaged in drinking, with men being heavier
drinkers than women and more prone to episodic or binge drinking. The rural average of alcohol
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5 Ritchie, H., & Roser, M. (2018, April). Alcohol consumption. Our World in Data. https://ourworldindata.org/alcohol-
consumption
6 World Health Organization. (2018). Global status report on alcohol and health 2018.

https://apps.who.int/iris/bitstream/handle/10665/274603/9789241565639-eng.pdf
7 Ibid.

Alcohol Prohibition in Bihar: A Policy Dilemma | 2

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consumption was estimated to be even higher than published statistics accounted for, with the

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availability of various other forms of homemade and local brews not being recorded.

Experiments with alcohol prohibition around the world

Prohibition 8 is the act or practice of forbidding something by law; the term particularly refers to
banning the manufacture, storage (whether in barrels or bottles), transportation, sale, possession,

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and consumption of alcoholic beverages. The word is also used to refer to a time during which such
bans are enforced. Globally, the countries that saw prohibition in varying degrees and later repealed
it largely because of unsatisfactory results were the US, Canada, Faroe Islands, Finland, Iceland,
Norway, Hungarian Soviet Republic, North Yemen, Turkey, Panama, Philippines, Pitcairn Islands,
Russia, UAE, and South Africa. Some others restricted certain religious sects within their countries on
the basis of the country’s dominant religion such as Pakistan, Qatar, Sudan, Bangladesh, and
Indonesia, and some countries such as Iran and Maldives did not have legal restrictions for foreigners.9

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The US experience

In the 1920s, when prohibition was first introduced in the US by changes to the Eighteenth
Amendment, 10 against the backdrop of the temperance movement brewing since the 1800s and
fervent religious revivalism of the Protestant churches, 11 it showed signs of early success, with a
reported 30% drop in alcohol consumption. However, it mostly backfired, taking a toll on the entire
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economy, 12 and did not just curtail the sale and consumption of liquor. Millions lost their jobs in
alcohol production facilities, food and beverage (F&B) establishments, and large venues (such as
sporting events) where alcohol might have been sold. This was a difficult economic decision to support
in a country that was still recovering from the ravages of World War I and needed to reabsorb its
returning soldiers into the workforce. It also created an illicit or “shadow economy” run by thugs,
giving “organized crime” a whole new product area to prosper. The illicit liquor trade saw earnings of
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US$3.6 billion back in 1926, or roughly US$50 billion in 2020 dollars, shaking the very foundation of
the alcohol and hospitality industries. Meanwhile, the federal government incurred losses to a tune
of approximately US$11 billion (US$152 billion as of 2020) in tax revenue and spent over US$300
million (US$4,140 million as of 2020) to keep the country running.13,14 Within a decade, the public and
government officials saw it as a policy failure, with more cons than pros to its credit.
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8 Definition of Prohibition. (2019). Merriam-Webster.com. https://www.merriam-webster.com/dictionary/prohibition

9 World Population Review. . Countries where alcohol Is illegal 2022. https://worldpopulationreview.com/country-
rankings/countries-where-alcohol-is-illegal
10 The Eighteenth Amendment of the United States Constitution established the prohibition of alcohol in the United States.

The amendment was proposed by Congress on December 18, 1917, and was ratified by the requisite number of states on
January 16, 1919. The Eighteenth Amendment was repealed by the Twenty-first Amendment on December 5, 1933. It is the
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only amendment to be repealed.

11 Britannica, T. Editors of Encyclopaedia. (2019, November 20). Prohibition. Encyclopaedia Britannica.

https://www.britannica.com/event/Prohibition-United-States-history-1920-1933
12 Macias, M. (2020, January 17). Prohibition began 100 years ago – Here’s a look at its economic impact. CNBC.

https://www.cnbc.com/2020/01/17/prohibition-began-100-years-ago-had-impact-on-us-economy.html
13 Ibid.
14 Consumer price index (CPI) calculated at 13.8, to be consistent with 2020 figures when the article was published.

Alcohol Prohibition in Bihar: A Policy Dilemma | 3

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Prohibition in India

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Article 47 of the Constitution of India is one of the directive principles. This article15 directs the states
to “raise the level of nutrition and the standard of living and to improve public health.” Among the
duties mentioned, the states were directed to prohibit the sale of intoxicating drinks and drugs, which
were injurious to health. Over the years, stringent laws evolved into stricter bans, with a handful of
countries still onboard the prohibition wagon, including a few regions in India. Alcohol prohibition

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within India had been linked to the changing social landscape of women’s empowerment and the
temperance movements. Since there was no codified national alcohol policy in India, the subject of
alcohol regulation fell under the purview of state governments, thus empowering them to frame
policies concerning matters of manufacture, sale, movement, consumption, and state excise rates of
alcohol.16 In India, Andhra Pradesh, Haryana, Kerala, Manipur, Mizoram, Nagaland, Bihar, Gujarat,
Tamil Nadu, and Lakshadweep saw alcohol bans in varying degrees17 (see Exhibit 2).

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Haryana had an alcohol ban for two years, from July 1996 to April 1998. Andhra Pradesh enforced a
ban for three years, from 1994 to 1997. Mizoram had a 17-year prohibition on alcohol, from February
1997 to July 2014, with certain amendments. Notably, Gujarat was the only Indian state with a death
penalty for manufacturing and selling homemade liquor that resulted in fatalities, owing to a hooch
tragedy that shook the state, killing about 159 people and hospitalizing hundreds after they were
critically ill by consuming spurious liquor.18 While prohibition restricted the overall consumption of
alcohol in states, a substantial proportion of the population remained dependent on alcohol and
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continued to indulge in varying degrees—Gujarat (30%), Bihar (16%), Manipur (17%), and Nagaland
(20%).19 Most Indian states also observed several dry days (specific days banning the sale of alcohol in
India) on major religious festivals depending on the festival’s popularity in that region and around
voting and result days ordained by the Election Commission of India.20

THE STATE OF BIHAR

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Bihar is located in eastern India and is the 13th-largest Indian state. It was once the center of learning,
power, and culture. But its road to socioeconomic development had been rocky from the start
compared to other parts of the country. A predominantly agricultural economy with three-fourths of
its population engaged in agriculture and only 11.3% living in urban areas, 21 Bihar saw economic
growth at a comparably slow rate and a relatively low literacy rate of 63.8%22 compared to top states
such as Kerala at 93.91%23 as of 2016. Bihar wrestled with a host of challenges beyond a slow economic
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15 Article 47 of Indian Constitution. Indian Constitution, IPC. https://indianconstitution.guru/constitution-of-india/part-

4/article-47/
16 Prohibition is enshrined in the Constitution of India under Article 47 as a directive principle, authorizing states to ban

intoxicating drinks, which are injurious to health.

17 Nidheesh, M. K. (2015, December 1). How Indian states have fared in banning alcohol? livemint.

https://www.livemint.com/Politics/PminUIJiL3vo0x8K45mgfM/How-Indian-states-have-fared-in-banning-alcohol.html
18 Katakam, A. (2009, August 14). Liquor deaths. Frontline. https://frontline.thehindu.com/other/article30187908.ece
19 Vatsyayan, S. (2019, May 16). Alcohol prohibition in Bihar: A policy analysis. Movendi International.

https://movendi.ngo/blog/2019/05/16/alcohol-prohibition-in-bihar-a-policy-analysis/
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20 National holidays such as Republic Day (January 26), Independence Day (August 15), and Gandhi Jayanti (Mahatma

Gandhi’s birthday on October 2) are usually dry days throughout India.

21 Census 2011. Bihar Urban Population 2011. https://www.census2011.co.in/census/state/bihar.html
22 Knoema. (n.d.). Bihar - Basic data » Literacy rate. https://knoema.com/DISESRC2017/dise-state-report-card-fy2008-to-

fy2010-2017?tsId=1096840
23 Knoema. (n.d.). Kerala - Basic data from census 2011 » Literacy rate. https://knoema.com/INSRED2017/india-state-

report-on-elementary-education?tsId=1152050

Alcohol Prohibition in Bihar: A Policy Dilemma | 4

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growth rate, with rampant cases of domestic violence involving women and children, an upsurge in

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violent and property crimes, homelessness, and poverty. With such a slew of roadblocks, alcohol
proved to be a further impediment on the road to progress.

Decision for Complete Prohibition and Implementation

The annual per-capita income of Bihar was less than US$450 in 2016 and one of the lowest across the

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country (US$1,680 average Indian gross national income in 2016),24 and the men in rural Bihar often
spent much of this income on alcohol, further depleting their households. As the state government
geared to close some gaps and accelerate socioeconomic progress, complete prohibition on the
manufacture, sale, storage, transportation, and consumption of alcohol in Bihar was enforced on April
6, 2016. It was expanded to cover Indian-made foreign liquor, too, attracting an imprisonment of at
least 10 years with a fine of at least US$1,492 (as of 2016) if found guilty of manufacture, possession,
or consumption of alcohol. The issuance of a complete ban, thereby, stemmed from an appeal by

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women who had been falling prey to domestic abuse and suffering various socioeconomic problems
related to alcohol consumption. The policy was complemented with special emphasis on women’s
empowerment and increased demand for education and health services for the vulnerable and
marginalized communities in the state.

During the initial phase of the ban, people accused of consuming or possessing liquor were sentenced
to five years of imprisonment and fined approximately US$1,349. This was before the law
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was amended in 2018 from being a nonbailable offense to being a bailable offense with a three-month
jail term or a fine of US$675 for first-time offenders.

Socioeconomic impact

When the policy was first introduced, it was hailed as the need of the hour and one of the best
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measures the Bihar government could have enforced. It was seen as providing an impetus toward
long-term sustained growth of the state through human development, as the prohibition empowered
the women and left more disposable income in the hands of the families to be spent on human
development indicators. Previously, scarce money was being spent on better consumption items (milk
and other dairy products, fish, vegetables), providing nutrition, children’s food and clothing,
education, home renovations, conveniences, celebrating festivals, etc. (see Exhibit 3). Men now spent
more time with their families, and there was a reduction in aggregate violence against women and
children and a decline in drunken brawls, road accidents, and kidnappings for ransom.25 Evidence from
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a study undertaken by the Gender Resource Centre, Women Development Society in 2017 was
consistent with the predictions of the socioeconomic analysis and resolve of prohibition. It established
direct linkages between liquor consumption and several social ills, particularly domestic violence and
crimes against women and children, further establishing the positive impact the total prohibition had
on millions of poor women and girls in the state.26 A year-on-year comparison of the data from Bihar
police for crime all-across Bihar for 2015 and 2016 also showed a dip in the overall crime rate after
the prohibition (see Exhibit 4).
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24 Macrotrends. (n.d.). India GNI per capita 1962-2021. https://www.macrotrends.net/countries/IND/india/gni-per-capita

25 ADRI. (2016). Study on impact of prohibition on economy, society and family life in Bihar. Asian Development Research
Institute.
26 GRC. (2017). Impact assessment of total prohibition on lives of women and girls in rural Bihar. Gender Resource Centre,

Women Development Corporation, Department of Social Welfare, Government of Bihar.

Alcohol Prohibition in Bihar: A Policy Dilemma | 5

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Recounting the positive outcomes of the ban in a short span while addressing a rally in December

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2016,27 the CM hailed prohibition as a radical move, adding, “the decision of liquor ban has further
promoted communal harmony in Bihar as members of all religions are whole-heartedly supporting
booze ban, which is a revolutionary step.”

The Gender Resource Centre study analyzed the first six months post-prohibition in structured
personal interviews with women. 85% of women said that conflicts in the neighborhood had reduced,

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78% of women said that the interpersonal interaction within their family household had improved,
73% of women said that ruckus during festivals/weddings had decreased, and 19% of women said they
had acquired new assets post-prohibition (5% had extended or renovated homes). Weekly
expenditure on liquor had declined, and that spent on education had increased. 43% of men spent
more time in farming. 84% of women said they had more savings, 31% of women affirmed an increase
in their household income, 58% of women exercised greater influence in household decisions, and
23% felt their area of influence now extended to village issues beyond the household.

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Impact on the state exchequer and other allied sectors

While many social issues seemed to be heading in the right direction under prohibition, it was not
merely a smooth series of positive outcomes. It was infantile to believe that all socioeconomic
problems disappeared with one stringent policy. One of the biggest challenges of this heavy-handed
policy was that the revenues from the state’s excise department took a severe blow, compounded by
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an additional revenue loss in other sectors such as hospitality, F&B, and tourism.

Just before the ban, in 2014–15, Bihar made over US$461.52 million from excise duty on liquor
sales, as per the Economic Survey of 2016. The survey alluded the estimate for 2015–16 to be
US$595.5 million.28,29
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It was not just the state exchequer but other allied industries such as tourism and hospitality that
took a hit. Tourism in Bihar was often tagged as “religious tourism,” owing to its famous temples and
other pilgrimage sites such as Bodh Gaya, Nalanda, Rajgir, and Vaishali. Lower- and middle-class
groups on a small budget visited the state largely, and tourism had been a minor contributor to the
state’s gross domestic product, especially compared to other more touristy states such as Rajasthan
and Gujarat. Nevertheless, it suffered collateral damage worth mentioning. A media report30 quoting
an Asian Development Research Institute official estimated a direct loss to the exchequer at
US$521.61 million, which spiraled into a staggering loss of US$1.49 billion, as per economists,
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considering the total loss in terms of sales tax and losses incurred by the hospitality sector.31 The
revenues from Goods and Services Tax in these sectors also took a severe hit, collapsing more than
90% to US$4.32 million in 2016–17 from US$468 million in 2015–16, and so did other economic
activities. Because of these shortfalls, the government was forced to withdraw all capital incentives,

27 PTI. (2016, December 8). Prohibition promoting communal harmony in Bihar: Nitish Kumar. The Economic Times.
https://economictimes.indiatimes.com/news/politics-and-nation/prohibition-promoting-communal-harmony-in-bihar-
nitish-kumar/articleshow/55877970.cms
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28 Parth, M. N. (2020, November 5). In Bihar’s liquor crackdown, the poorest have been hit the hardest, while the rich are

getting away. Scroll. https://scroll.in/article/977552/in-bihars-liquor-crackdown-the-poorest-have-been-hit-the-hardest-

while-the-rich-get-away
29 Figures calculated as per the average exchange rate in 2016: USD1 = INR67.1765.
30 Mishra, D. (2019, December 14). Why a ‘liquor tour’ of Bihar is unlikely to help Rajasthan’s prohibition push. The Print.

https://theprint.in/india/why-a-liquor-tour-of-bihar-is-unlikely-to-help-rajasthans-prohibition-push/335256/
31 Figures calculated as per the average exchange rate in 2016: USD1 = INR 67.1765.

Alcohol Prohibition in Bihar: A Policy Dilemma | 6

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including subsidies for industries investing in Bihar. Meetings, incentives, conferences, and

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exhibitions (MICE) tourism suffered a huge blow; most big events, conferences, etc., moved to other
states, and hotel occupancy rates fell considerably.

Bootlegging, bribery, and corruption

As per media reports, illegal businesses thrived alongside bribery and corruption, whereby powerful

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contractors, traders, and unemployed youth engaged in bootlegging shared their profits with the local
administration and the police.32 Organized crime became the dominant source of contraband. There
were widespread rumors and criticism about the sale and consumption of illicit liquor at thrice the
normal price, enriching the pockets of bootleggers who were earning as much as approximately
US$1,34933 a month.

According to a media report,34 an anonymous source revealed:

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“Desolate places like a graveyard or farmlands in the dead of night were ideal for
collecting weekly consignments under inconspicuous code words. The locations kept
changing to deflect any suspicion. Elections were, ironically, the time to make the
most money as politicians tend to distribute free alcohol to entice more voters. 2019
general elections in Bihar were one such example.”

The upsurge in bootlegging with a distributor in every lane was partly attributed to growing
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unemployment, which was at an alarming 19.4%, as per a survey conducted by the Centre for
Monitoring Indian Economy between September and December 2018.35 Huge losses in terms of excise
revenue, which could come in handy for establishing new industries and fostering job opportunities
to an already cash-starved state, could not be overlooked. Meanwhile, the liquor mafia and the police
nexus were suspected to be in cahoots and siphoning off all the money that would have otherwise
come to the state exchequer.
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Liquor smuggling from nearby places such as Uttar Pradesh, West Bengal, Jharkhand, and Nepal was
a grave issue, with over 260,000 people booked under the law. Government expenditure on
surveillance, destruction of seized liquor, and facilitation of police raids increased manifold. Forty-
thousand bail pleas were stuck in the Patna High Court (the court with jurisdiction of the state), and
8,000 were jailed, leading to overcrowding of prisons. 36 Up until November 2019, about 167,000
people had been arrested for flouting the law and over 5.2 million liters of alcohol had been seized.37
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The high court eventually directed the government to establish special fast-track courts to handle all
such cases, but the backlog was still mounting.

32 Khan, M. I. (2017, November 6). How the bootlegging industry is flourishing in the dry state of Bihar. NewsClick.
https://www.newsclick.in/how-bootlegging-industry-flourishing-dry-state-bihar
33 Figures calculated as per the average exchange rate in 2020: USD1 = INR74.13, in line with the article publication year.
34 Parth, M. N. (2020, November 5). In Bihar’s liquor crackdown, the poorest have been hit the hardest, while the rich are

getting away. Scroll. https://scroll.in/article/977552/in-bihars-liquor-crackdown-the-poorest-have-been-hit-the-hardest-

while-the-rich-get-away
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35 Parth, M. N. (2019, March 7). Travels through the Hindi belt: In dry state Bihar, youths resort to bootlegging as

unemployment rises at an alarming 19.4%. Firstpost. https://www.firstpost.com/india/in-dry-state-bihar-youths-resort-to-

bootlegging-as-unemployment-rises-at-an-alarming-19-4-6215331.html
36 Karmakar, D. (2019, November 22). Court clogged with 2 lakh booze ban cases: Patna High Court to Bihar government.

The Times of India. https://timesofindia.indiatimes.com/india/courts-clogged-with-2-lakh-booze-ban-cases-patna-high-

court-to-bihar-government/articleshow/72176308.cms
37 Ibid.

Alcohol Prohibition in Bihar: A Policy Dilemma | 7

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Unintended consequences: Impact on the underbelly

Prohibition, while cheered by many households, created unanticipated problems for others. Varied
media reports criticized the disproportionate punishment meted out to the offenders as most of those
caught were from marginalized sections of the society, who further sank into debt to pay the heavy
fines and mounting interest to the moneylenders, all the while being unemployed themselves. Those

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with their sole male earning member in prison, sometimes even for minor offenses, were utterly
desolate.38

Many women surveyed complained about their husbands consuming substandard liquor at thrice the
price, directly defeating the purpose of this law. Illegal and counterfeit hooch tragedies owing to
prohibition were not new to the country, and Bihar witnessed many such episodes. Within four
months of this ban, 20 people had lost their lives after consuming spurious liquor in August 2016.39

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With regulated alcohol being unavailable, more people resorted to other intoxicants, leading to
widespread abuse of other substances. Those who produced cheap homemade liquor were further
pushed into poverty by being jobless for fear of being caught. Tribal areas and social groups
traditionally involved in making liquor found it particularly demotivating to give up their age-old
livelihoods. They had nowhere to go and no alternate employment. Certain media reports highlighted
that most of the prohibition-related arrests were from the marginalized and poorer sections of society,
while the affluent and privileged often got away with violating the law.40 To escape detection, many
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bootleggers paid poor farmers and laborers in villages to hide their stock. It was not the
businesspeople who got arrested, but the carriers and delivery boys, who were often school- and
college-going children funding their education through this income stream as it was far from
affordable for their parents. Social profiling of the inmates in May 2018 41 revealed that across a
multitude of central, district, and sub jails, the percentage of inmates belonging to the scheduled
castes, scheduled tribes, and other backward classes exceeded their share of the state’s population.
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Ironically, a policy that sprang out of a very vocal and assertive women’s community also got
compromised by the womenfolk in certain parts of the state where they were agents of bootlegging
themselves and were found selling country liquor at hiked prices without a care of the police.42

THE WAY FORWARD

The CM publicly upheld his decision in the 2020 election campaign. But it was not such a
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straightforward route for the administrative unit who were at a crossroads and had to consider the
viability of this decision impacting the state exchequer in full force and the pressure on state
machinery—both police and judicial system—for enforcing the ban. The chief advisor was not in a

38 Ramashankar, & Khan, S. (2019, December 2). The social cost of prohibition in Bihar and Gujarat. The Times of India.
https://timesofindia.indiatimes.com/india/the-social-cost-of-prohibition-in-bihar-and-gujarat/articleshow/72304617.cms
39 PTI. (2021, March 6). Bihar hooch tragedy: 9 awarded death sentence, 4 women get life imprisonment. The Wire.

https://thewire.in/law/bihar-illicit-liquor-case
Do

40 Chakravarti, V. (2018, May 28). Prohibition in Bihar: Marginalised bear the brunt of the law. NewsClick.

https://www.newsclick.in/prohibition-bihar-marginalised-bear-brunt-law
41 Parth, M. N. (2020, November 5). In Bihar’s liquor crackdown, the poorest have been hit the hardest, while the rich are

getting away. Scroll. https://scroll.in/article/977552/in-bihars-liquor-crackdown-the-poorest-have-been-hit-the-hardest-

while-the-rich-get-away
42 Zumbish. (2019, April 24). 'Dry' Bihar is losing the battle against the bottle. The Wire. https://thewire.in/law/dry-bihar-is-

losing-the-battle-against-the-bottle

Alcohol Prohibition in Bihar: A Policy Dilemma | 8

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 ISB314

t
position to either defend the policy or to advise the CM to go back on the policy. The state assembly

os
elections were due in the next six months. What could he have done?

rP
yo
op
tC
No
Do

Alcohol Prohibition in Bihar: A Policy Dilemma | 9

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of copyright. Permissions@hbsp.harvard.edu or 617.783.7860
 ISB314

t
Exhibit 1

os
Trends in Total Alcohol per-Capita Consumption in WHO Regions, 2000−2016

14

12

rP
10

yo
0
2000 2005 2010 2016
AFR 6.2 6.3 6.3 6.3
AMR 8.2 8.2 8.2 8
EMR 0.4 0.5 0.6 0.6
EUR 12.1 12.3 11.2 9.8
SEAR 2.4 2.1 3.5 4.5
op
WPR 4.8 4.6 7 7.3
World 5.7 5.5 6.4 6.4

Source: World Health Organization. (2018). Global status report on alcohol and health 2018. License: CC BY-NC-SA 3.0 IG0.
https://apps.who.int/iris/bitstream/handle/10665/274603/9789241565639-eng.pdf
tC

Exhibit 2
Alcohol Prohibition in India

State/Union Prohibition act Timeline

territory
Gujarat Bombay Prohibition Act, 1949; Bombay Prohibition (Gujarat 1948–1950;
Amendment) Act, 2009 1958 onwards
Bihar Bihar Prohibition and Excise Act, 2016 2016 onwards
No

Lakshadweep Lakshadweep Prohibition Regulation, 1979

Nagaland Nagaland Liquor Total Prohibition Act, 1989 1989 onwards
Mizoram Mizoram Liquor Total Prohibition Act, 1995; Mizoram Liquor 1997–2014
(Prohibition and Control) Act, 2014; Mizoram Liquor Prohibition Act,
2019
Andhra Andhra Pradesh Prohibition Act, 1995 1994–1997
Pradesh
Haryana Haryana Panchayati Raj Act, 1994 (Section 31) 1996–1998
Do

Kerela The Prohibition Act 1950; Abkari Act, 1 of 1077 2014–2017

Manipur Manipur Liquor Prohibition Act, 1991; Manipur Liquor Prohibition 1991–2002
(Amendment) Act, 2002
Tamil Nadu Tamil Nadu Prohibition Act, 1937
Source: Created by the author using data from various online sources

Alcohol Prohibition in Bihar: A Policy Dilemma | 10

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of copyright. Permissions@hbsp.harvard.edu or 617.783.7860
 ISB314

t
Exhibit 3

os
Sales Tax Collection (April–September) and the Growth Rate of Tax Collection (April–September) for
Commodities for Common Use
Amount in INR millions Annual growth rate
Name of commodity (2016–17)
2015–16 2016–17
Clothing

rP
Saris43 more than INR 2,000/piece 0.7 12.7 1,715.2
Textile fibers more than INR 500/meter 1.2 12.1 910.5
Hosiery and ready-made garments 322.6 464.7 44
Food and beverages
Kirana44 195.3 255.3 30.7
45
Bhujia 61.9 101.6 64.1

yo
Processed vegetables and food 32.7 47.6 45.6
Biscuits 651.7 790.3 21.3
Beverages 567.7 677.7 19.4
Fast food and cooked food 596.7 707.8 18.6
Dry fruits 12.2 14.1 15.6
Stationery
op
Stationery 49.1 64.1 30.7
Paper 145.7 178.2 22.3
Goods for common use
Plastic goods 264.3 437.3 65.5
Entertainment tax 43.3 55.9 29.2
tC

Furniture 189.8 228.0 20.1

Sewing machines 2.2 2.7 18.8
Sports goods 4.7 5.6 18.3
Fast-moving consumer goods 2,615.6 3,083.4 17.9
Footwear 188.1 220.4 17.2
Consumer durables 867.0 1,015.7 17.2
No

Electrical goods
Electrical goods 4,071.6 6,154.8 51.2
Automobiles
Four wheelers and chassis of automobiles 2,064.8 2,675.5 29.6
Tractors 559.0 721.4 29
Two- and three-wheelers 1,988.0 2,615.4 31.6
Engines and motors 95.1 127.0 33.6
Do

43 The sari (often spelled “saree”) is a garment traditionally worn in India, Sri Lanka, Pakistan, Bangladesh, and Nepal. It can
be an heirloom passed down through generations or a purely functional garment worn every day.
44 A Kirana store is a departmental shop that serves as the local neighborhood stores in India. One can find daily items of

household use such as rice, wheat, vegetables, spices, and shampoos

45 A kind of fried savory made of pulse (cereal) flour with vegetables inside.

Alcohol Prohibition in Bihar: A Policy Dilemma | 11

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 ISB314

t
Autoparts 319.3 655.9 105.4

os
Batteries 531.6 635.4 19.5

Source: ADRI. (2016). Study on impact of prohibition on economy, society and family life in Bihar. Asian Development
Research Institute

rP
Exhibit 4
Bihar Police Crime Data: The Entire State

Type of crime Total cases in 2015 (before Total cases in 2016 (after the Bihar
the Excise Act, 2016) Excise Act, 2016)
Cognizable 195,397 189,681
Murder 3,178 2,581
Dacoity 426 349

yo
Robbery 1,640 1,410
Burglary 4,518 4,511
Theft 22,461 22,228
Riots 13,311 11,617
Kidnapping 7,127 7,324
Kidnappings for ransom 58 37
Rape 1,041 1,008
op
Road dacoity 175 169
Road robbery 1,195 1,119
Bank dacoity 9 8
Bank robbery 5 3

Source: Vangala, V. (2017, April 18). Is Bihar faring better or worse after alcohol ban?
https://movendi.ngo/blog/2017/04/18/bihar-faring-better-worse-alcohol-ban/
tC
No
Do

Alcohol Prohibition in Bihar: A Policy Dilemma | 12

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of copyright. Permissions@hbsp.harvard.edu or 617.783.7860