Saturday, September 8, 2012


Kerala has made a progressive stride in its steps towards preventing the manufacture and trade of uncontrolled illicit liquor by bringing in the entire foreign liquor trade in the State under the Beverages Corporation. The taxation system prevalent in the State is that the liquor on the basis of its alcoholic content are taxed very heavily. On a comparison with other States, it can be found that the tax rates are so high in the state that most of the smugglers use, Mahe, (a part of Pondicherry State, where taxes are lowest)  and also use border check-posts  as conduits for smuggling of illegal liquor in to this State. This should have been at par with the tax rates of other states and it is unlikely that we can lower the tax rates at this stage, due to the huge loss in revenue anticipated. But it may be noted that the after the banning, the clear arrack is coming in a coloured form in the guise of foreign liquor.   The high tax regime has raised concerns in food safety of almost all sections of the male population of the State. Let me share some thoughts on this issue. (In the Gods own land of controversies, please understand that the views  expressed here are purely professional from the food safety point of view, and all the Governments, for the last few decades are following the same policy, more or less in the same lines, thinking that  High tax regime and holiday on the first day of a month will reduce consumption of liquor(sic))

1.     Preventing working class from consuming hard liquor: Though cheap liquor is purchased by the Beverage Corporation, a high tax regime prohibits the common man/working class to consume the foreign liquor sold by govt run outlets.  The result is that, he has to depend on illicit liquor, brewed with prohibited materials and in unhygienic condition,  and this often leads the government to embarrassing situations in the form of hooch tragedies. And governments, in the past, announced Rs.5 lakh per victim to tide over public anger. It may be kindly understood that even in gulf countries, where punishments like beheading or flogging in public has failed to prevent the manufacture and trade of illegal liquor. Any wise government will have to acknowledge that the consumption of liquor cannot be prevented by just raising the taxes and making the commodity prohibitively costly. That will help only illegal market to grow. It is necessary in the interest of the working class that the govt should provide them with an opportunity to take good quality liquor at a lesser cost, but with government’s control need to be there on the alcohol content and without the private manufacturers taking benefit undue advantage. The solution proposed is to manufacture good quality cheap liquor, with low alcohol percentage, at the government run Chittor sugars or Pandalam sugars and make them available through the beverages corporation/consumerfed outlets. Unless this is done, we are encouraging the mixing on illegal spirit in toddy and the health of our working class is being affected badly. In the olden days, the working class preferred country toddy, after a day’s hard labour, but the available material also has become an unsafe commodity. (see point 5 below). This high alcohol content liquor is UNSAFE, as it is spoiling the health of the our working class.

2.     Preventing younger generation from consuming hard liquor: The second class of citizens whose health is adversely affected because of the inadvertent promotion of hard liquor by the government is the youth of the State. We cannot prevent the youth from the consumption of alcohol especially when they are in parties/get-together, which are part of the vibrancy of their age.  In every such get-together, the youth generation is forced to consume the hard liquor because the cost of low alcohol beverages like beer and wine are prohibitively high in the State. So it is natural for anyone to buy and consume a half-a-pint of hard liquor rather than going for a bottle of wine or few bottles of beer. In several western countries, beer is considered in equivalent to any other beverages like Coke and Pepsi. In a recent article in the 'Times of India' exploring on why the consumption of alcohol is not affecting the health of Europeans, even they consume on a daily basis, the main reason is stated therein to be the consumption of beverages with low alcohol percentage, where Indians consume more hard liquor in short span of time.  In almost all the metros in India, ‘Beer pubs’ are common. It may also be acknowledged that the high cost of beer and wine has led to the failure of KTDC's Beer/Wine Parlours.  It may be also be noted that even in the Technopark, where about 30,000 employees are working, of which over 95% are in their prime youth, do not have Beer/Wine Parlours. They are forced to take hard liquor from the nearby Bar. Therefore, there is an urgent requirement to bring down the taxes on beer and wine. There is also a major policy shift to establish large number of Beer Parlours along with 2 Star/3 Star Hotels or even in common hotels to make available this low alcoholic beverage to the younger generation.  If this is not done, the Government may unknowingly make all the younger generation, habitual drinkers of hard liquors and not only the future generations become alcoholic but also the Government has to spend most of its revenue generated from foreign liquor on their health care. The increase in consumption of low alcohol drinks will ensure that there will not be any drop in tax revenue. But, at the same time,  the health expenditure will also come down.

3.     Prevention of illegal trade of foreign made foreign liquor: Thirdly, the Government expect that any decent person in the State has to stand in the queue of the shabby Beverages Corporation's outlets along with thugs and crooks.  This is the reason for the high surge in the sale of scotch and other foreign brand in the 'smugglers market'.  Unconfirmed studies estimate that, the market for sale of scotch and other imported brands in Kerala is around Rs.750/- Crores per year.  The Government is not getting a single paisa as tax except from the sale of liquor in the Duty Free Shops. There is also a high prevalence of spurious liquor in the imported liquor market (which affects the health of its good citizens). The Government can immediately raise around Rs.100/- Crores, as tax, if  super market type of shops for imported brands and premium Indian brands are opened in all the district headquarters, where the high/upper class and the rich can walk-in, select their own brand rather than standing in the queue before the Beverage Corporation outlet officials. Delhi and other metros have already started these kind of shops.  This will not only ensure the availability of, again the quality liquor which will not affect the health of the people, but also the Government can immediately get a sizeable income from the sale. But the present taxing system on liquor may not be made applicable in this case, since the prices will become substantially high, when compared with the prices in the "smuggler's market" and there will be few takers. Therefore, a 50 to 100 percent increase in tax may be ideal, where customers are even willing to give extra amount to the tune of Rs.300/- to Rs.500/- per bottle, since the liquor supplied is a genuine brand. This policy will  take care of the health of the upper and upper middle class and Government spend will be less.

4.     License fees for the Clubs and Wayside restaurants  When the Government started giving licenses for Bar in clubs, the fee was fixed at Rs.50,000 per year. Now, I am told that this almost equal to that of bar licenses.  Government has to issue licenses for beer and wine parlours in clubs, and in all types of small hotels in the level of ‘Aramam’ of the KTDC. The ‘Vazhiyoram’ project of the tourism department would have created a network of safe hotels, a boon to the travelling population, since they are controlled by the department. It is understood that one of the reasons it did not take off since, the beer/wine permit was not issued. There is a need for giving beer and wine permits to all the clubs and those wayside hotels under the department control. This measure will encourage the consumption of low alcohol beverages. This policy will again promote the low alcohol content beverages.

5.     The adulteration of Toddy:  Its is a secret known to all. Kerala taps 4 lakh litres of toddy from coconut and palm and consumes 20 lakh liters annually. Where does this ‘16 lakh litres’ come from? Synthetic toddy. Is it restricted to permitted chemicals and vegetables? No. It contains all known and unknown chemicals and high degree of spirit smuggled in, not to mention Diazepam and chloral – harmful drugs added to increase the ‘kick’. Where is this leading to? We are again ruining the health of our working class knowingly. The wayside toddy shops are frequented by the lorry drivers day and night, and the mixed alcohol is one of the causes of high accident rates of Kerala.  Toddy is to be treated as a luxury good. Permit rooms have to be attached to the hotels with Bar licenses. The rates at these hotels for pure toddy have to be high. The benefit will go to the toddy tappers. Upper and middle class will consume and that will also yield more tax to the Government. The public has to be offered choice-- between low alcohol toddy or hard liquor at a Bar. Time has come to stop the auctioning of toddy shops – it has to move to a permit system.

          In all the instances suggested above, it can be seen that the Government has to spend on the health care an equal amount of whatsoever amount generated out of the sale of foreign liquor.  If the Government policy continues like this, it is likely that the Health Care spend will become multi-fold in the years to come, as the whole generation would become addicted to hard liquor, affecting their vital organs. We are spoiling a whole new generation because of flawed liquor policy aimed, at least in paper, for discouraging people from consumption of alcohol, but levying exorbitant taxes. Therefore, a major paradigm shift in the policy of sale of foreign liquor in the State of Kerala is the need of the hour.


  1. good article sir..infact liquor is a causative agent for several diseases..

  2. സര്‍,
    വളരെ നല്ല നിര്‍ദ്ദേശങ്ങളാണ് പക്ഷേ ഇത് എത്രത്തോളം നമ്മുടെ കേരളത്തില്‍ നടപ്പിലാക്കാന്‍ കഴിയും എന്നുള്ളതാണ് പ്രശ്നം

  3. Dear Sir,
    Your article correctly points out the problems and has offered apt solutions. The observation that we can build a healthier generation by encouraging low alcohol content beverages like beer/wine is really outstanding.
    Our youth is getting hard wired in to drinking hard -liquor. Malayalis working/studying outside the state are also not able to switch to lighter version of alcohol, thanks to their grooming in our state.I have also watched tourists asking for beer in restaurants and getting disappointed. We can’t, at the same time, take high moral ground of not providing beer/wine to tourists at their convenience but as a society immerse in alcohol though out the day.
    Many socio-religious and political organization takes the moral high ground in the issue of alcohol and bats for its complete ban. As you correctly pointed out, it can only create black market and spurious liquor. There is a huge demand for liquor in Kerala and it has to be met.
    What can only be done with success, as you pointed out, is to influence the consumer behavior of end users. This is achievable and is a normal marketing task for any organization. By properly pushing beer/wine through multiple outlets and by creating brands which cater to the different segments, easy availability, can help in removing the stigma associated with consuming alcohol and effectively curb the social menace e caused by prevalence of high content alcohol consumption.
    Our drunkards (sic) are looking for the state to help them to regain some Respect.
    Your comparison of Europeans drinking daily but has not visible health issues and the situation in our state is very apt. Especially as a state we enjoy similar profiles of human development with European nations and also as our per capita income is high, number of people with out much work to do or differently put- having enough leisure time- may be adding to this loop of, More time, more drinking behavior.
    I have often wondered why Keralaites have a penchant to drink and die. Some how, Malayalis are suffering huge social pressure and is always on the look out for an escape route. Social behavior in terms of expectations is quite exacting . Flow of funds from outside Kerala has pushed the state in to a pressure cooker like situation in terms of monetary expectations , socio-religious expectations. Socio-religious expectations and Non resident Keralite remittance pressure is almost reinforcing each other. More socio-religious pressures, more people going outside the state, more people going outside and bringing more money, socio-religious expectations again go up. Resulting in a positive loop or ‘reflexivity’. I don’t know whether this is a curse or a boon.
    Any way, in such a scenario, if there is one product which will always go up in demand, it is liquor.We can’t wish it away, but let’s lower the alcohol concentration.

  4. Sir,Your idea will be complete if it says any thing about"NEERA".

  5. Sir,

    Excellent analysis of the situation and suggestions. Cheers!

    I hope you'd take heart in the fact that a few days ago, a supermarket style outlet was opened in Trivandrum under Bevco, similar to the ones in other metros and as suggested in your article. A welcome stride!

    Our inability to market the local palm toddy as a part of our culinary tradition to the tourists is a shame. The traveler devours the Sake while touring Japan or the Dawah while in Kenya and talks about it! Its high time we package and sell it as an upmarket drink. There is a lot of engagement and experience for the tourist in the earthen pots and the sucking of pickle or spicy stuff after it that could become touristy folklore. A "Take that, you Tequila"! During a recent visit to a 5 start hotel in Kovalam, the bartender had an item named Kallu in the menu which is a cocktail he conjured with vodka and some other drinks and on enquiry said, was well received by the westerners!

    Beer and Wine License fees are low as I could gather from the Excise ministry website but they just are not available! An upmarket restaurant owned by the Muthoot Group in tvm is not able to get this for the past one year! Then think of the case of wannabe restaurateurs like the poor Your's Truly!

    Cheers once again!

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