Figuring Things Out: September 2022

Sunday, September 25, 2022

Booze for a Balanced Budget

I have been trying to figure out the relationship between booze and state revenues for a while now.

States in India seem to have a whole spectrum of different approaches to alcohol sales. On one end of this spectrum you have states like Gujarat that have had an official ban on alcohol sales for decades, and at the other end, there are states like Kerala that actually depend on taxes from alcohol sales for a major chunk of their revenue. The extent of this dependence is not something I had understood until I reeled in a thread on Twitter a few days ago.

On 23 Sep., 2022, @thekaipullai mocked the communist-led coalition government in Kerala for their dependence on alcohol sales and the sale of lottery tickets. Out of Kerala's total state revenue last year, which amounted to INR 1.03 lakh cr (USD 13,733 million @INR75/$), more than 60% came from:

Central Govt grants contributed to INR 36,000 cr (USD 4800 m)
Alcohol sales contributed INR 13,000 cr (USD 1730 m)
Lottery sales, INR 9000 Cr (USD 1200 m)

The point being made here was that the much touted "Kerala Model" is a sham since it stands on state revenues that feeds on the desperation and addiction of its people.

While there can be a debate on the way in which excise revenue is being calculated (or window-dressed), Kerala just happens to be just one of the many states that have turned alcohol sales into a state monopoly, and, in turn, driven up the levels of addiction.