Outlook Explains | Bihar's Liquor Ban Has A Revenue Problem, Why Can't The BJP Lift It?

Bihar’s decade-old prohibition policy is facing renewed scrutiny after a recent study recommended that the state revoke its total liquor ban, arguing that it has failed to achieve its primary objective of reducing violence against women while causing major revenue losses.

The findings have put the ruling NDA in a political bind. While the BJP is aware of the potential revenue gains from reopening the liquor market, reversing the ban could risk offending Nitish Kumar, who introduced prohibition in 2016 and has made it a defining part of his political legacy.

Why was liquor banned in Bihar?

Nitish Kumar’s government imposed complete prohibition in April 2016, following demands from women’s groups and activists. The central argument was that alcohol consumption contributed to domestic violence and drained household incomes that could otherwise be spent on food, education and other necessities.

The policy became closely associated with Kumar’s political identity, making any rollback particularly sensitive for the JD(U).

What does the NCAER report say?

A research paper by the National Council of Applied Economic Research (NCAER), presented at the India Policy Forum, argues that the ban has not delivered its intended results.

The study, led by economist Ratna Sahay, found that reported crimes against women did not decline after prohibition. Instead, total reported crimes against women increased during the post-2016 period.

It also pointed to the rapid growth of an illicit liquor economy, bootlegging, corruption and the use of alternative intoxicants. According to the report, legal alcohol consumption was replaced in part by illegal liquor and other substances.

The study also highlighted the costs of enforcement, including resources spent on policing and anti-smuggling operations, as well as the public health risks posed by spurious liquor.

How much revenue could Bihar gain?

The biggest attraction of lifting prohibition is financial, as per the report.

Before the ban, alcohol excise duty accounted for around 14% of Bihar’s own revenues in the three years preceding prohibition. The NCAER study estimates that restoring excise taxation could increase the state’s revenues by 14-15%.

With Bihar generating around Rs 65,000 crore in annual revenue, the potential additional revenue could run into thousands of crores. The money could be directed towards areas identified as critical to Bihar’s development, including education, healthcare, infrastructure and job creation.

For a state facing major development and fiscal challenges, that is difficult to ignore.

Has prohibition achieved its original objective?

The NCAER study says the available evidence does not show a broad-based reduction in crimes against women following prohibition.

At the same time, the ban has created its own enforcement problems. Illegal liquor networks have expanded, policing resources have been diverted towards stopping smuggling, and concerns over corruption and dangerous spurious liquor have persisted.

The result is a paradox: alcohol remains officially prohibited, but an illegal market continues to supply it.

Why is Nitish Kumar the political problem?

Nitish Kumar introduced prohibition and has consistently defended it. Even as discussions over its economic costs grow within the NDA, changing the policy could be seen as undermining one of his signature decisions.

The BJP may therefore have a financial incentive to reconsider the ban but a political incentive to proceed cautiously.

The issue has already exposed differences within the NDA. JD(U) MP Devesh Chandra Thakur has said, “Liquor ban has not succeeded anywhere,” and called for a review. But Union Minister Chirag Paswan has argued that the need to boost revenue does not mean the ban should be lifted. HAM(S) chief Jitan Ram Manjhi, meanwhile, has favoured stricter implementation.

Chief Minister Samrat Choudhary has also said the government will not revisit the policy for now.

What does the BJP risk by reversing the ban?

For the BJP, lifting prohibition could provide a major revenue boost, but it could also hand the Opposition a political weapon.

The RJD has already argued that the NCAER findings demonstrate the government’s failure to implement prohibition effectively. A rollback could allow the Opposition to accuse the NDA of abandoning a policy that was justified in the name of women’s welfare.

It could also create friction with Kumar and sections of his support base.

Could Bihar move towards partial prohibition?

Rather than immediately scrapping prohibition, the government could consider a regulated, partial reopening of liquor sales, potentially alongside tighter controls and excise taxation.

There are already discussions within the ruling alliance about the economic costs of the ban, the parallel liquor economy and its impact on sectors such as hospitality.

For now, however, the BJP appears unlikely to make a sudden move. Bihar’s liquor ban may have a serious revenue problem, but it remains a politically sensitive legacy of Nitish Kumar. Any change, therefore, is likely to be gradual—and carefully negotiated within the NDA.