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Alcohol Prohibition Laws and its Socio-Economic Impact on Society


The socio-economic impact of an alcohol ban can be multi-faceted and vary depending on various factors such as the duration of the ban, the specific region or country, and the existing social and economic conditions. This blog seeks to give an insight into the consequences of alcohol prohibitions be it positive or negative, and how it impacts the common man and the economy at large.

KEYWORDS: Socio-economic, alcohol, bans, prohibitions, society, economy


In the context of India, an alcohol ban isn't a novel idea. The state of Gujrat right from its inception in 1949 has been a dry state- a state where alcohol is strictly prohibited. The latest example of this is Bihar, where alcohol was prohibited in 2016. The other states and union territories where the prohibition is in place are Nagaland, Mizoram and Lakshadweep, with a few districts of Manipur. Whether the ban positively or negatively impacts the socio-economic status of the affected area remains a contentious issue.


There is a provision of Directive Principles of State Policy (DPSP) from Article 36 to Article 51 in Part IV of the Indian Constitution. They are guiding principles that the state is expected to consider while formulating policies and implementing laws.

Article 47 of the Indian Constitution states that “the state shall make every effort to ban the consumption of intoxicating drinks and substances that are injurious to health.” Therefore, even if the Constitution does not explicitly prohibit alcohol, it expects the government to keep its repercussions in mind while formulating its policies.

Different states have varied rules and regulations for alcohol because of the 7th Schedule of the Constitution which comprises the state list or the list of subjects that are under the jurisdiction of the state government. This grant states the authority to enact laws and impose taxes on alcoholic beverages intended for human consumption. Hence, each state possesses its own set of regulations, local ordinances, and guidelines concerning alcohol. This results in the differing status of legality in different states.

The impact on society and the economy also depends on the region the ban has been put in place. For example, alcohol prohibition in Bihar led to the loss of a staggering 4000 crores of revenue. [1]Since Bihar was already an economically backward state, the additional revenue loss by the alcohol ban proved to be fatal to the state’s exchequer.

Apart from this, there are also other socio-economic impacts due to liquor prohibition. These are explained briefly in the following points:-

  1. Economic impact: The alcohol industry serves as a major revenue generator that contributes significantly to the state as well as the nation. The industry is also labour-intensive and a prohibition on alcohol can lead to loss of employment for many. It will also lead to joblessness for those who are involved in the distribution and retail selling of the product. This results in a significant share of revenue losses that can be used to develop the region further. The government hence risks losing a major revenue source by prohibiting the manufacturing, sale and consumption of liquor.

  2. Informal Economy and Illicit Activities: In some cases, alcohol bans can lead to the growth of an informal or illicit market for alcohol. This underground market may involve the production and sale of bootleg alcohol, leading to an increase in illegal activities and organized crime. People may continue to consume alcohol albeit secretly. Such activities can further strain law enforcement resources and contribute to social instability. Bootleg alcohol is also extremely harmful to health and can even lead to death if consumed in large amounts. People may be enamoured to try a cheaper version of alcohol and endanger their lives. The medical costs of treating such conditions will further put a strain on them.

  3. Public health and safety: Advocates of alcohol bans often cite health benefits, such as a reduction in alcohol-related accidents, injuries, and diseases. A positive impact of an alcohol ban is that lower consumption of alcohol may lead to a decline in incidents like drunk driving, alcohol-related violence, and health issues associated with excessive alcohol use. This can potentially alleviate the burden on healthcare systems and improve public safety.

  4. Influence on social behaviour: An alcohol ban can have both positive and negative impacts on social behaviour. While on one hand, anti-social behaviour under the influence of liquor can be reduced, but on the other hand consumption of alcohol in social gatherings facilitate interpersonal dynamics and this can have an effect on that.

  5. Impact on tourism and hospitality industry: Regions or countries known for their nightlife and alcoholic beverages may experience a decline in the tourism and hospitality sectors due to an alcohol ban. A prohibition on alcohol can dissuade visitors who appreciate engaging in nightlife, visiting bars or breweries, or immersing themselves in the local alcohol culture and they may opt for alternative destinations, impacting the local economy that relies on tourism.


The socio-economic implications of alcohol prohibition are many. There are several drawbacks and advantages to doing the same. Alcohol bans help us realize that there is a drastic need for diversification of revenue sources for the states as well as the nation. The loss of revenue from the alcohol industry can prove to be disastrous in an economy already suffering from loss. However, we also cannot overlook the positive impacts on society due to an alcohol ban. There is evidence linking alcohol with domestic abuse and a prohibition on it can help uphold women’s rights.

The underground market of alcohol also needs to be curbed if a ban is imposed, as poorer sections of society may fall prey to it. Since there are no regulations on underground markets, the sale of denatured alcohol may also become rampant.

Increasing taxes on alcohol can be a good way to discourage people from consuming exorbitant amounts of liquor while also keeping the economy in check. This method will not only help reduce alcoholism but also generate additional revenue that can be utilized for public welfare.


There are both positive and negative socio-economic impacts of the prohibition of alcohol. Even if a ban results in a decrease in anti-social behaviour and alcoholism, it has the chance to promote an underground market for alcohol. A change in the temperaments of people regarding alcohol won’t happen without effort. It will take a gradual change for everyone to accept the government’s policies assuredly and governments therefore need to properly analyse whether an alcohol ban will be a right fit for the region, considering its social and economic implications.

[1] Siddharth Sharma, Alcohol Prohibition, its Economic Impact and Constitutionality: Special Reference to Bihar and Gujarat, GNLU JOURNAL OF LAW AND ECONOMICS (Feb 8, 2023),,chunk%20of%20which%20was%20alcohol.

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