Prohibition in a changing world: Time for India to rethink

The first declared that the sale of liquor will be banned within a 100-kos radius of the temple. The second, in sharp contrast, reported that Gujarat’s GIFT City will allow the sale of alcohol for the first time in the state’s history. And the third, perhaps the most astonishing, came from Saudi Arabia—one of the world’s most tightly regulated societies—where the Kingdom has opened its first alcohol store for non-Muslim diplomats in Riyadh.
These developments prompt us to revisit prohibition: its origins, its failures, and its relevance in a modernising world.

The Gandhian Legacy and the Constitutional Mandate
India’s tryst with prohibition traces back to Mahatma Gandhi’s firm opposition to alcohol, rooted in its destructive social impact on the poor. His influence found constitutional expression in Article 47 of the Directive Principles of State Policy, which exhorts the State to prohibit the consumption of intoxicating drinks.

This provision has been the basis of sweeping state-level controls. States may impose complete prohibition or regulate alcohol as they see fit, recovering revenue through taxes and licenses. Gujarat remains the most steadfast adherent to this principle, having enforced prohibition since its creation in 1960, while Maharashtra abandoned it. But prohibition was contentious even during the freedom movement.

Gandhi vs Bose: A Debate from 1939
The philosophical clash between Gandhi and Subhas Chandra Bose illuminates the tension still alive today. Gandhi saw prohibition as a moral duty, necessary to protect families from ruin. He acknowledged the loss of revenue but insisted on its necessity as a social reform.
Bose, while supporting the moral rationale, criticised the policy’s practical flaws. He warned of illegal distillation, black markets, and economic disruption. He argued that prohibition should be phased in gradually to avoid excessive taxation, unemployment in the hospitality sector, and damage to Bombay’s economy. Eighty-five years later, Bose’s warnings ring prophetic.

Lessons from Experience
India’s history with prohibition is littered with grim consequences: Illicit liquor deaths occur wherever prohibition is enforced, a tragic byproduct of driving demand underground.
Border economies thrive around “dry states,” exposing the futility of bans. Revenue losses are staggering. Gujarat sought `9,000 crore in compensation from the Finance Commission for its forgone revenue. Bihar sacrificed `3,000 crore annually and now spends nearly as much on enforcement.

Unmanageable laws have clogged courts and jails. In Bihar, nearly 800,000 people have been arrested under prohibition-related laws, prompting severe criticism from the judiciary.
The irony is inescapable: Saudi Arabia, long the global symbol of prohibition, is loosening restrictions to curb smuggling, while Indian states cling to outdated bans at great cost.

Prohibition in the 21st Century
Today, four Indian states, representing about 200 million citizens, or 14% of the population, retain prohibition laws. Yet the alcohol industry contributes nearly 2% of India’s GDP, according to a recent ISWAI report. Its significance to state finances and employment cannot be overstated.

More importantly, prohibition fails to align with the principles of “Ease of Doing Business,” a slogan frequently invoked yet rarely applied to this sector. At a time when Gujarat relaxes its own rules in GIFT City to attract foreign investment, the dichotomy becomes evident.

The Way Forward
The time has come to reimagine India’s alcohol policy. Instead of patchwork bans and politically-expedient experiments, the country needs a national alcohol policy that balances regulation with economic realism. Uniform rules, rational taxation, and safeguards against abuse could modernise the industry while reducing harm.

Gandhi’s concern for the downtrodden was genuine. But as Bose argued, reform cannot be divorced from social acceptance, economic sustainability, and practicality. Eight decades later, India must recognise that prohibition has failed in both spirit and practice.

To cling to outdated bans while the world—and even the conservative Saudi Arabia—moves forward is to deny both history and common sense.

It is time to lift the fog of prohibition and embrace a pragmatic, humane, and economically-sound policy for the future.