When Nitish Kumar imposed a statewide liquor ban in 2016, the move was framed as a social reform designed to curb alcoholism, reduce domestic violence and improve household welfare. A decade later, the policy’s social outcomes remain debated - but its fiscal costs are far easier to quantify. The move, however, did earn the Bihar CM a tag of "Sushashan Babu", but it cost the state more than Rs 3,000 crore annually in revenue.
The following year, after prohibition came into force, excise collections collapsed to Rs 30 crore. Since then, they have remained negligible.
Between 2012–13 and 2015–16, Bihar’s excise revenue consistently ranged between 0.8 and one per cent of GSDP. For context, states on average budgeted around one per cent of GSDP from excise duty as recently as 2022–23 - underscoring the magnitude of the revenue stream Bihar forfeited.
In simple arithmetic terms, the state has forgone upwards of Rs 3,000 crore annually over the past decade — translating into a cumulative notional revenue loss of roughly Rs 30,000 crore or more, excluding growth adjustments. The opportunity cost may be even higher when accounting for rising consumption trends seen in other states.
The debate over prohibition has resurfaced within the ruling NDA alliance. Jitan Ram Manjhi, a Union minister and ally, has questioned the implementation of the law.
“We have been saying for a long time that the liquor policy is not wrong, and prohibition should be implemented. However, there are flaws in its implementation,” he said.
“In our state, the enforcement officers catch those very people, while those who do large-scale smuggling are being let off after taking money. Nitish Kumar should take action. Prohibition is causing significant financial losses to the Bihar government, and Nitish Kumar should address this,” Manjhi said.
“Prohibition is causing significant financial losses to the Bihar government, and Nitish Kumar should address this,” Manjhi said, urging stricter action against corruption in enforcement.
The financial stress is not abstract. Bihar’s fiscal deficit stood at 9.2 per cent of GSDP last year. At the same time, new welfare commitments, including direct cash transfers to women, enhanced pensions and electricity subsidies, are expected to cost upwards of Rs 28,000 crore.
The ban has also imposed administrative and judicial costs. According to an earlier report by The Times of India, more than 8.43 lakh cases have been registered and nearly 12.8 lakh arrests made under the prohibition law since 2016.
Source: India Latest News, Breaking News Today, Top News Headlines | Times Now
