In the light of the looming fiscal crisis threatening the states, comment on the state government’s reliance on revenue from liquor and lotteries. How can the states boost their revenue inflow?

Recently, the governor of Kerala Arif Mohammad Khan has criticized the state government for excessively relying on sale of liquor and lottery to increase the revenue. This has sparked a debate, should the government sell sin goods?

Arguments against:

• The consumption of sin goods is linked to ‘public bad’ however, the motive of the government should be to create a welfare state.
• The consumption of alcohol has negative impacts on health and the weaker sections of society are the most affected.
• The state has prioritized profit over welfare of people.
• The government uses only one tool to limit the use of sin products, that is by increasing the taxes. However, if a person becomes addicted then his habit will continue despite the sufferings.
• In many cases, the poor switch to illegal, lower quality alcohol due to its lesser cost. However it is extremely harmful for their health.
• There is a direct link between alcohol consumption and domestic violence, criminal.

Arguments in favour:

• The state can positively regulate the sale and consumption of sinful commodities.
• Sources of revenue for the states are limited and they heavily rely on the financial devolution from the Centre.
• After implementation of GST, only a few number of goods and services like alcohol and petroleum have remained under the ambit of the state government’s taxation power.
• Privatisation of sinful products will bring the prices down due to competition, which will increase their consumption and hence the health hazard will also increase.

Way forward:

Measures to limit consumption should go hand in hand with the steps for providing alternative livelihood opportunities for those engaged in the industry.