While owners of 730 bar-attached hotels of below five star category who have lost licences hold that the decision would push the hospitality industry into a deep crisis, Chief Minister Oommen Chandy has asserted that the "social cost" to be saved by cutting down on liquor will be far higher than revenue flowing to the exchequer through liquor sales.
The Kerala State Beverages Corporation (Bevco), sole distributor of Indian Made Foreign Liquor (IMFL), recorded a sales turnover of Rs 8818.18 crore in 2012-13, earning the state the negative reputation of having one of the highest per capita liquor consumption.
According to Bevco figures, in the first four-and-half months of the current fiscal sales crossed Rs 3754.67 crore.
Bevco contributed a hefty Rs 7240.89 crore in 2012-13 and in four months of this fiscal brought to the exchequer Rs 3127.02 crore.
Liquor sales has been the virtual monopoly of Bevco after arrack was banned in Kerala in 1996 by the UDF ministry, headed by A K Antony.
Since then, IMFL consumption has increased steadily from 32.52 lakh cases in 1995-96 to 244.33 lakh cases.By mid August of the current fiscal, 99.55 lakh cases had already been sold. Beer consumption has also shown a sharp rise in this period.
The decision to close down the bars was taken last week after the issue of renewing licences of 418 bars snowballed into a crisis in the Congress.
While KPCC president V M Sudheeran took an adamant posture against a soft policy towards bar owners, sections in the party was for a "realistic and practical" approach rather than keeping the bars shut for ever.
As the issue dragged on without a resolution since April this year, an impression gained ground that Chandy stood for a practical solution, which struck down by acting firm and fast when the issue reached the UDF leadership meet.
Political analysts term it as a "master stroke" by Chandy that outwitted his rivals in the Congress as well as the LDF opposition, who found it difficult to oppose the decision, fearing a popular backlash.