Impact of liquor taxation on consumption patterns in India

The paper fits an ordered logit specification to primary data from a rural survey of Karnataka state in India in 2003–2004, to determine whether ease of access to liquor has a statistically significant impact on the probability of a rural household consuming liquor, further classified into occasional and daily consuming households. The inbuilt incentive in the present design of liquor taxation in the state for promoting rural access to liquor motivates the study. It is important that the struggle for fiscal resources to reach the Millennium Development Goals should not be achieved at the expense of the state becoming a partner in promoting the consumption of a potentially addictive substance.