ECONOMIC ANALYSIS OF LIQUOR PROHIBITION IN BIHAR ON THE EFFICIENCY CRITERIA

Abstract

The State of Bihar implemented a State wise liquor ban on manufacturing, possession, sale and consumption of Indian Made Foreign Liquor (IMFL), Foreign Made Foreign Liquor (FMFL) and Beer on April 5, 2016, through the “Bihar Prohibition and Excise Act, 2016” to empower women and control domestic violence faced by them due to excessive drinking. The present study is based on a critical analysis of the abovementioned legislation and its potential impact on the economy of Bihar. The impact analysis shall be based on data collected from different sources. The study will analyse the State’s economic capacity and its resources used towards effective implementation of the alcohol ban in the last four years. The study’s findings can help decide whether the abovementioned law is an economically efficient solution or not for a resource starved State like Bihar. The study will also shed light on the unintended consequences of the Bihar alcohol prohibition policy on the socio-economic environment of the State. Consequently, based on the findings, the policymakers can understand the impact of the policy on revenue, social and other economic expenditures of the State government, employment and economic growth of Bihar. At this point, it is imperative to understand that the economic impact of prohibition policy cannot be undermined. In order to assess the full range of economic implications of the liquor ban policy, the government of Bihar needs to understand that the implementation should not evoke contradictory responses from policy targets. This will make the alcohol prohibition policy well-designed and help control spill-over effects and other externalities attached to it.