The Crossbill News Desk
Bihar’s prohibition policy has come under fresh scrutiny after a study presented at the National Council of Applied Economic Research (NCAER) India Policy Forum 2026 argued that the 2016 liquor ban has failed to deliver a broad-based reduction in crimes against women while imposing a substantial fiscal burden on the State.
The paper, titled Macro Perspective of Bihar’s Development: Achievements, Unfinished Agenda, and the Way Forward, recommended repealing the prohibition regime, according to Business Standard.
It was authored by Ratna Sahay and Aakash Dev of NCAER, Santosh Gautam of the University of Notre Dame and Nishith Prakash of Northeastern University.
The researchers estimated that alcohol excise duty had accounted for around 14% of Bihar’s State revenue in the three years immediately preceding prohibition. The ban not only eliminated this source of income but also increased government expenditure on monitoring the illegal liquor trade and enforcement, adding pressure on the State’s finances.
“It has not served society well at all. It was 14-15 per cent of all revenues. That is a huge loss,” Sahay said at the NCAER event.
The study also questioned one of the principal arguments historically advanced in favour of prohibition — improved safety for women. Analysing National Crime Records Bureau (NCRB) data covering 2012 to 2024, the authors found that reported crimes against women had risen in Bihar following the introduction of the ban. They cautioned, however, that improved reporting could account for part of the increase.
“Overall, the available evidence does not indicate a broad-based reduction in crimes against women following prohibition. At the same time, the prohibition regime has been accompanied by concerns regarding the expansion of the illicit liquor trade, increased enforcement challenges and corruption, and the growing use of alternative intoxicants, including illicit drugs,” the paper states.
The researchers further linked the prohibition regime with the expansion of illegal alcohol networks and the emergence of other forms of substance abuse.
“In tandem, there was a significant rise in the illegal liquor trade, leading to higher alcohol consumption, increased crime and corruption, and an increase in the use of alternative addictive substances, such as illicit drugs,” it added.
Bihar enacted the Bihar Prohibition and Excise Act, 2016, following a campaign led by women and social activists demanding a complete ban on alcohol. Since then, the prohibition policy has remained a politically significant issue in the State.
Beyond prohibition, the NCAER paper examined Bihar’s broader economic and social trajectory. It found that the State has recorded average annual growth of 7.3% since 2005, higher than the national rate of 6.1%. Despite this growth, Bihar continues to have the lowest per capita income among Indian states, at roughly one-third of the national average.
The study noted that multidimensional poverty fell from 51.9% in 2015-16 to 33.8% in 2019-21, with an estimated 22.5 million people moving out of multidimensional poverty during the period. Yet, around one-third of Bihar’s population continues to experience deprivation across multiple dimensions, the highest proportion among Indian states.
The authors identified education, healthcare, governance and law and order, flood management, private-sector development and women’s empowerment as six areas requiring priority attention.
Education emerged as a particular concern. According to the paper, only 25.3% of children entering Class 1 in Bihar eventually reach secondary school. The study also pointed to shortages of doctors and weak investment flows, noting that foreign investment in the State stood at just Rs 10.02 crore in FY25.
On the fiscal front, the researchers suggested stronger State tax mobilisation, restoration of liquor excise revenue and increased financial transfers from the Union government as possible measures to address Bihar’s fiscal pressures.
The findings put the State’s prohibition policy alongside wider questions over revenue mobilisation, enforcement, women’s safety and development, with the authors arguing that Bihar’s economic progress needs to be accompanied by reforms addressing these persistent structural challenges.
The paper, titled Macro Perspective of Bihar’s Development: Achievements, Unfinished Agenda, and the Way Forward, recommended repealing the prohibition regime, according to Business Standard.
It was authored by Ratna Sahay and Aakash Dev of NCAER, Santosh Gautam of the University of Notre Dame and Nishith Prakash of Northeastern University.
The researchers estimated that alcohol excise duty had accounted for around 14% of Bihar’s State revenue in the three years immediately preceding prohibition. The ban not only eliminated this source of income but also increased government expenditure on monitoring the illegal liquor trade and enforcement, adding pressure on the State’s finances.
“It has not served society well at all. It was 14-15 per cent of all revenues. That is a huge loss,” Sahay said at the NCAER event.
The study also questioned one of the principal arguments historically advanced in favour of prohibition — improved safety for women. Analysing National Crime Records Bureau (NCRB) data covering 2012 to 2024, the authors found that reported crimes against women had risen in Bihar following the introduction of the ban. They cautioned, however, that improved reporting could account for part of the increase.
“Overall, the available evidence does not indicate a broad-based reduction in crimes against women following prohibition. At the same time, the prohibition regime has been accompanied by concerns regarding the expansion of the illicit liquor trade, increased enforcement challenges and corruption, and the growing use of alternative intoxicants, including illicit drugs,” the paper states.
The researchers further linked the prohibition regime with the expansion of illegal alcohol networks and the emergence of other forms of substance abuse.
“In tandem, there was a significant rise in the illegal liquor trade, leading to higher alcohol consumption, increased crime and corruption, and an increase in the use of alternative addictive substances, such as illicit drugs,” it added.
Bihar enacted the Bihar Prohibition and Excise Act, 2016, following a campaign led by women and social activists demanding a complete ban on alcohol. Since then, the prohibition policy has remained a politically significant issue in the State.
Beyond prohibition, the NCAER paper examined Bihar’s broader economic and social trajectory. It found that the State has recorded average annual growth of 7.3% since 2005, higher than the national rate of 6.1%. Despite this growth, Bihar continues to have the lowest per capita income among Indian states, at roughly one-third of the national average.
The study noted that multidimensional poverty fell from 51.9% in 2015-16 to 33.8% in 2019-21, with an estimated 22.5 million people moving out of multidimensional poverty during the period. Yet, around one-third of Bihar’s population continues to experience deprivation across multiple dimensions, the highest proportion among Indian states.
The authors identified education, healthcare, governance and law and order, flood management, private-sector development and women’s empowerment as six areas requiring priority attention.
Education emerged as a particular concern. According to the paper, only 25.3% of children entering Class 1 in Bihar eventually reach secondary school. The study also pointed to shortages of doctors and weak investment flows, noting that foreign investment in the State stood at just Rs 10.02 crore in FY25.
On the fiscal front, the researchers suggested stronger State tax mobilisation, restoration of liquor excise revenue and increased financial transfers from the Union government as possible measures to address Bihar’s fiscal pressures.
The findings put the State’s prohibition policy alongside wider questions over revenue mobilisation, enforcement, women’s safety and development, with the authors arguing that Bihar’s economic progress needs to be accompanied by reforms addressing these persistent structural challenges.
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