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Musings
   Prasoon S Majumdar
Prasoon S Majumdar
Editor, Economic Affairs - The Sunday Indian
Dean Academics (All India), The Indian Institute of Planning and Management
[27/07/2008]

Bottoms up!!

Cess on alcohol for education is a most welcome step

Recently there has been an interesting news which has gone largely unnoticed. The news was with respect to a radical step that has been initiated in the state of Punjab. And that is of introduction of a cess on liquor sales which would go in terms of building school infrastructure in the state. The interesting aspect of the model is not just that it is both logical and radical but most importantly actionable, given the particular political and social context. The model is based on a Public Private Partnership wherein, the state and the private sector would contribute Rs 600 and Rs 500 per month per child toward the initiative. In fact, the students who mostly come from economically weak [read: poor] households would not be charged a penny for provisioning this entire education. Planning Commission has already sanctioned Rs 75 crore for the scheme and some thirty-seven schools are scheduled to be up and running by the coming year. It has also been reported that the government plans to start off with 2700 of the 6000 schools on a similar model.

A lot of recognised names of the India Inc. has welcomed this model and has committed their bit to partner in such innovative initiative. But what is interesting in this model is that the cess on liquor is finding its way into educational development. More than any other industry participating in this initiative, this model seems more logical on account of the very fact that the consumption of alcohol has been on a meteoric rise in the country. Reports suggest that the sale of beverages like beer has gone up by 90 per cent in the last five years, particularly in North India. The saga remains the same for South India as well. Reports suggest that alcohol consumption in states like Kerala has gone up to such a level that it tops the charts of maximum per capita consumption in the country. The same holds true for other states as well.

According to the latest version of ‘’ prepared by Indian Alcohol Policy Alliance (IAPA), production of alcohol nearly doubled from 887.2 million litres in 1992-93 to 1,654 million litres in 1999-2000 and it was forecasted to have trebled to just about 2,300 million litres (2007-08). So as alcohol sales go up, above and beyond, and being highly price elastic [and tax-inelastic], a concept of cess to replicate the Punjab model would be an excellent alternative of sourcing funds for education across India. And for that matter why just alcohol, a similar cess should be applicable on tobacco and related products to create a similar model [Public Private Partnerships] for health infrastructure too. For consumption of tobacco and tobacco related products has also gone up dangerously even after several deterrents put across by various state governments. As per the World Health Organisation, India is already home to 12 per cent of the world's smokers; meanwhile, an ICMR survey points out that the cost of treatment of tobacco-related diseases will be nothing less than Rs 280 billion.

The social and environmental cost associated with alcohol and tobacco is very high and is higher especially in case of developing countries like ours. Besides associated health costs [almost 60 to 70 per cent of accidental deaths in India are on account of drunken driving], there are other socio-economic costs as well which the society bears. In the given scenario, there cannot be a better way to pay back to the society for all the harm that it inflicts!


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