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Square Peg

By INDIA TODAY Special Correspondent Subhash Mishra.

As the much-dodged liquor policy comes before the Uttar Pradesh Cabinet for clearance, there are fears that the liquor mafia may continue to have its way. India Today Special Correspondent Subhash Mishra reports.

When licenced wine shops---as against auctions earlier---were made the only conduit for the sale of beer in Uttar Pradesh nine months ago, it was considered a major setback for the influential liquor mafia in the state. But the cartel, like always, bounced back and with its impregnable clout, ensured that its monopoly over the trade remained intact.

So as the much-dodged liquor policy comes before the Cabinet for clearance next month, the question doing the rounds in the state is whether it will prove more effective if it is given a go-ahead in the first place. The liquor lobby, which has come to occupy key positions in the state legislature and the council of ministers, doubts very much. But then again, Excise Minister Surya Pratap Shahi is a determined man. We will not succumb to any pressure, he vows (see interview).

Much of the determination stems from the long-overdue realisation that the existing scheme of things---the auction system for the sale of all alcohol, except beer---gave immense leverage to the liquor industry to make high profits through legal---and illegal means. The state, in the process, was losing out heavily.

Before 1980, the auction of liquor shops was being conducted shopwise, but soon it became a district-level affair. Concerned only about increasing its auction money, the government was happy raising the target by 10 to 20 per cent every year. Once the target was achieved, the liquor contractors had a free hand to fix their per-bottle prices. The Government seemed to be saying nothing.

With the increase in auction money, small operators started getting eliminated by the big fish. Soon seven liquor contractors ended up gobbling up the entire share of the market in the state, with the 83 districts (before the division of Uttaranchal) divided among them. One contractor, Jawahar Jaiswal, a Samajwadi Party MP, has 14 districts under him. Other big names in the business: D.P. Yadav, Jawahar Jaiswal and Devendra Singh, all MPs; Jitendra Kumar Jaiswal and Sangram Singh, ministers in the Rajnath Singh Government; and J.P. Jaiswal, MLC.

Given the freedom they enjoyed, many contractors also began to smuggle in cheaply available liquor from neighbouring states like Delhi, Rajasthan and Madhya Pradesh. The liquor cartel virtually befooled the state Government by projecting lower sales. Contrary to ground reality, official records reveal that the sale of beer declined from 2.43 crore alcoholic litres in 1997-98 to 2.27 crore alcoholic litres in 1998-99 while the sale of foreign liquor passed off as stagnant in the 1990s. We have umpteen complaints and cases of adulteration, confirms S.P. Gaur, principal secretary, excise.

The liquor policy, in its current shape, aims at setting such irregularities right. Taking the sale of beer away from the clutches of the liquor contractors by opening licensed shops was the first direction in cracking a whip on the liquor cartel, explains Gaur. According to Minister of State for Excise Yashwant Singh admits that his department lacks manpower and other infrastructure like vehicles and weapons to effectively monitor the sale of liquor. But all that, he hopes, will change soon.

Under the liquor policy, if cleared, auctions will give way to a system wherein licences will be issued to people to set up liquor shops. -We are also planning to fix the prices of liquor bottle at the factory point and increase excise duty,- says an official, claiming that it would help attract small traders and break the monopoly of big operators. Regulated prices, the excise officials hopes, will ensure good sales.

A section of the Government is worried. Presently, the Excise Department is a major contributor to the state treasury. As much as 99.08 per cent of the total revenue it generates is deposited with the state and only 0.02 per cent is used by the department to meet its expenses. The department, on its part, has ready answers. Officials contend that licence fees will make up for the sizeable auction money that it would be losing. But there's no denying that it can do with more funds for itself. At least to equip itself better and ensure that its checks and balances are in place.

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