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The Cost of the Legal Drinking Age

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Published in: Economics And Policy

Each year, state governments in the country collect lakhs of crores in excise revenue from alcohol. In FY 2023-24, Uttar Pradesh collected 36,600 crores, Maharashtra 37,000 crores, Andhra Pradesh 27,000 crores, Karnataka 19,500 crores, and Tamil Nadu 17,000 crores. With just the top 5 states, the total collection comes to about 1,37,100 crores. Alcohol has been excluded from the GST precisely because of this reason, it simply brings in too much money. The Alcohol excise duty is one of the few major tax sources that is controlled entirely by the state governments, making it even more significant, one that governments have come to rely heavily on to contribute to their budgets.

Yet, by law, we have excluded a very large portion of the population from being able to access it legally; most states have barred young adults aged 18 – 25 from drinking alcohol. This has one of two effects: either these adults are unable to access alcohol, or they are driven to the black market to do so illegally. This article tries to ask a simple question: how much does this drinking age cost us, and what exactly is it that we are paying for?

Current Legislative Scenario

There is no uniform drinking age in the country, with each state deciding its own drinking age, but most states can be divided into 4 categories

  • Age 18+: Goa, Himachal Pradesh, Rajasthan, Sikkim, and the UT of Pondicherry.Age 21+: Andhra Pradesh, Karnataka, Tamil Nadu, Uttar Pradesh, and West Bengal
  • Age 25+: Punjab, Haryana, Chandigarh, Meghalaya, Delhi, etc.
  • Prohibition: Bihar, Gujarat, Mizoram, and Nagaland

* Maharashtra allows the consumption of beer at the age of 21, but hard liquor is allowed only after attaining 25 years of age.

Each state has its own rationale for the age threshold it sets, but each additional year of the minimum drinking age also costs significant sums of tax revenue. The rationale is usually a combination of public health and order. The question is, do the citizens realise the bill they are footing for these improvements in public health and order, if any?

The Bill

Forgone Revenue

Understanding the financial impact of a high drinking age begins with an obvious reality: underage Indians consume alcohol regardless. Despite laws, evidence shows widespread early use. From Delhi, a study led by CADD revealed 88.8% admitted to consuming alcohol before turning 25. That number aligns with broader trends seen elsewhere. NFHS-5 records show 10.9% of males between 15 and 24 have tried it at least once, though actual rates likely exceed this due to social pressure to conceal usage. Patterns in Kerala add further weight. Data collected by ADIC indicates that those below 21 made up just 2% of drinkers earlier; now they represent more than 14%. Over time, one thing remains unchanged: behaviour does not follow legislation.

This core contradiction is clear: buying occurs, yet remains beyond taxation. Whether bottles move via informal sellers in Bihar, drinks are served privately in Chandigarh homes, or travellers head to Goa for lawful, low-cost options, the exchanges leave no trace in government records. Such actions form part of the economy, still unseen, unchecked, and untaxed.

Significant sums vanish when alcohol taxes go uncollected. In India, these duties often constitute most of the shelf price, between sixty and eighty per cent. Take Uttar Pradesh: combined rates settle near sixty-nine per cent. During 2022–23, Tamil Nadu’s TASMAC pulled in more than forty-four thousand crore rupees yearly. Bypassing such systems deprives the government of income, though buyers face unsafe brews and possible arrest. Bringing just part of the nation’s young drinkers, aged eighteen to twenty-five, into legal channels could yield revenues counted in many thousands of crores each year.

These thousands of crores can be put towards education, health, and infrastructure. The opportunity cost of this decision is just too large to ignore.

Paying for the Policy

The costs do not end here; the state must also pay to enforce a policy that already drains state coffers. Government spending rises while upholding ineffective rules. Take Bihar as an example. Following the 2016 alcohol ban, more than a million FIRs were tied to prohibition. This led to well above one million detentions. Previously, excise collections reached Rs. 3,142 crore. Yet by 2017–2018, such earnings nearly vanished.

Enforcement expenses now climb. The Comptroller and Auditor General noted Bihar’s outlay on alcohol prohibition enforcement almost doubled within twelve months of implementation. Court systems face delays because of these legal actions, drawing regular people into criminal records. Around three hundred thousand unresolved matters sit in judicial pipelines, adding strain.

Defending these restrictions grows harder when one considers the adulthood privileges in India at age eighteen. At that point, one may cast votes, enter binding agreements, wed, enlist militarily, and face criminal charges as a fully grown adult. Yet consuming alcohol remains forbidden, though governance deems judgment sound enough elsewhere. It is strange, granting autonomy across vital domains, only to withhold it where revenue flows into public coffers. Same age, different maturity assumptions, one part trusted, another restricted, raising questions not just about economics, but also about liberty.

The Justifications

A commonly accepted argument for setting the drinking age high stands upon three points, each of which needs careful comparison to be properly assessed.

One reason lies in brain structure: full maturation of the prefrontal cortex occurs only by age twenty-five. Though backed by science, this logic extends further than intended. If maturity were tied strictly to neural growth, then granting rights like voting or marrying at eighteen would raise serious questions.

Safety on roads stands as the second rationale. After the U.S. set 21 as the minimum legal drinking age in 1984, deaths involving younger drivers decreased. According to the NHTSA, about 30,000 lives have been preserved since 1975 due to this rule. Still, a study by Miron and Tetelbaum in 2009 showed a different picture: when examining only states pressured by financial incentives and excluding those that chose to raise the age on their own, the drop in deaths lost its statistical strength. In nations like Canada, Australia, and the United Kingdom, similar reductions occurred even though they did not raise their alcohol purchase ages.

Thirdly, Justifications revolve around social concerns and fears of alcohol acting as a gateway to substance abuse. In states where consumption is allowed at 18, such as in Goa, the alcohol trade aligns closely with registered businesses, embedding use within regulated leisure industries. In contrast, states setting the bar at twenty-five, including Punjab, face widespread loss of taxable income because younger individuals seek access through informal suppliers or cross state lines. More significantly, tight regulations may push behaviour underground; after Bihar banned alcohol, confiscated cannabis rose almost 2700%, showing that prohibitive laws rarely stop substance desire, rather they redirect it into riskier, uncontrolled channels.

The Substitution Effect and Shadow Markets

Where rules tightly control alcohol, getting intoxicated does not vanish; it shifts form. Figures across India suggest that around 57 million individuals struggle with dependency on alcohol. Yet in Bihar, a sharp turn occurred: seizures of cannabis climbed close to 2,700% from 2015 to 2021, after alcohol was banned, regular users turned elsewhere. Legal access alters more than volume consumed; the kind of substance used transforms, along with when and where it is taken, also shaping government oversight ability.

Should the government fix alcohol access at age twenty-five, economic inefficiency follows. Not only is the tax income received by the government reduced, but behavioural records disappear too. With regulation in place, authorities observe usage trends, then adjust public health strategies accordingly. Without visibility into underground trade, oversight ends.

The decision also has a ripple effect on the hospitality sector. Younger crowds, those below twenty-five, make up a notable share of possible visitors to eateries and drinking spots in cities like Delhi or Chandigarh. When strict age rules apply, they act much like invisible barriers limiting the ease of doing business. Revenue streams shift, property levies dip, jobs in services shrink, and income from commercial usage fades as activity migrates toward informal, unrecorded corners.

So, Is It Worth the Price?

At present, the record shows opposing perspectives. One perspective rests on safeguarding well-being; it points to injury risks behind the wheel, then links easier drinking access among youth to potential spikes in dependency, a notable issue across more than fifty-seven million lives affected nationwide. Such issues carry weight. To overlook them would reflect poor judgment.

Meanwhile, lost tax income reaches tens of thousands of crores. Enforcement demands funds yet achieves minimal results. Many young adults enter informal markets due to actions the government cannot stop. A deeper conflict shapes Indian citizenship, maturity recognised in some contexts, withdrawn in others, based on shifting state preferences.

Ultimately, a higher legal drinking age fails to stop alcohol use. Instead, it shapes which parties benefit. At present, those gaining are underground sellers, illegal networks, and shadow markets. Public money covers enforcement costs and absorbs health impacts from unchecked usage, yet yields no financial return to society.

Whether the trade-off is worth it is for you to decide; hopefully, the next time you hear a politician talk about the legal drinking age, maybe you’ll decide to ask what it costs, and if it’s worth the price.

References

  1. India Data Map (2025, July 12). State-wise Excise Duty Collection, FY 2023–24. Retrieved from https://indiadatamap.com/2025/07/12/india-state-wise-excise-duty-collection-fy-2023-24/
  2. Theamikusqriae.com (2024). Legal Age of Intoxication: Addressing Alcohol Consumption by Minors in India. The Amikus Qriae. Retrieved from https://theamikusqriae.com/legal-age-of-intoxication-addressing-alcohol-consumption-by-minors-in-india/
  3. Community Against Drunken Driving (CADD). Survey cited in: The Amikus Qriae (2024). Legal Age of Intoxication; and Ambrosia India (2021). Alcohol Consumption Patterns in India. Retrieved from https://www.ambrosiaindia.com/2021/02/4494/
  4. Tandfonline.com (2026). Alcohol consumption among youth of India: a secondary data analysis of NFHS-5 data. Journal of Substance Use. Data from NFHS-5 (2019–21), n=272,752 respondents aged 15–24. DOI: 10.1080/14659891.2026.2613255
  5. Prasad, R. (2009, January). Alcohol use on the rise in India. The Lancet, 373(9657), 17–18. DOI: 10.1016/S0140-6736(08)61939-X
  6. Alcohol and Drug Information Centre India (ADIC). Cited in: Kerala Government Deccan Chronicle (2017, December 7). Kerala government to raise legal drinking age to 23. Retrieved from https://www.deccanchronicle.com/nation/current-affairs/071217/kerala-government-to-raise-legal-drinking-age-to-23.html
  7. Getswipe.in (2025, September 16). Taxes on Liquor by State in India. Retrieved from https://getswipe.in/blog/article/taxes-on-liquor-by-state-in-india
  8. TASMAC. (2025). Wikipedia: TASMAC. Retrieved from https://en.wikipedia.org/wiki/TASMAC
  9. Wiley Online Library / PMC (2024). Prevalence and long-term change in alcohol consumption: results from a population-based cohort in Southern India. PMC11465489. Citing: TASMAC liquor sales in TN cross Rs. 44,000 cr mark in 2022–23. United News of India, April 2023.
  10. The Federal (2026, March 3). As Bihar’s liquor ban turns 10, Nitish faces pressure from allies, rivals. Retrieved from https://thefederal.com/category/states/north/bihar/nitish-kumar-nda-allies-opposition-liquor-ban-jdu-bjp-232424
  11. Outlook India (2025, November). Sharab Bandi Marks a Decade: Did Bihar’s Liquor Ban Help the State or Nitish Kumar? Retrieved from https://www.outlookindia.com/elections/sharab-bandi-marks-a-decade-did-bihars-liquor-ban-help-the-state-or-nitish-kumar; and Daily Pioneer (2026). Bihar Prohibition: A Decade of Dry Law. Retrieved from https://dailypioneer.com/news/bihar-prohibition-a-decade-of-dry-law
  12. Sudhamanjulajha.com (2025, July 6). Bihar Liquor Prohibition – From Promise to Predicament. Citing CAG report data. Retrieved from https://sudhamanjulajha.com/2025/07/06/bihar-liquor-prohibition-from-promise-to-predicament/
  13. Scroll. in (2020, October 26). Prohibition hit Bihar’s revenues hard. Will it also hurt Nitish Kumar’s election prospects? Retrieved from https://scroll.in/article/976747/prohibition-hit-bihars-revenues-hard-will-it-also-hurt-nitish-kumars-election-prospects; and reference to CJI N.V. Ramana’s December 2021 remarks reported in The Quint (2022, January 24). Diluting the Prohibition Law in Bihar. Retrieved from https://www.thequint.com/news/india/bihar-liquor-prohibition-law-nitish-kumar-amendment
  14. Fell, J.C. et al. (2009). The Impact of Underage Drinking Laws on Alcohol-Related Fatal Crashes of Young Drivers. PMC2825167. Citing: National Centre for Statistics and Analysis data 1982–1995.
  15. Justice Speakers Institute (2025, March 23). The 21-Year-Old Minimum Drinking Age Law Still Saving Lives. Citing NHTSA estimates. Retrieved from http://justicespeakersinstitute.com/6587-2/
  16. Wikipedia (2026). National Minimum Drinking Age Act. Citing: Miron, J.A. & Tetelbaum, E. (2009). Retrieved from https://en.wikipedia.org/wiki/National_Minimum_Drinking_Age_Act
  17. Ambrosia India (2021). Alcohol Consumption Patterns in India. Citing National Survey on Extent and Pattern of Substance Use in India (2019), Ministry of Social Justice and Empowerment. Retrieved from https://www.ambrosiaindia.com/2021/02/4494/
  18. Nadkarni, A. et al. (2022). Alcohol use among adolescents in India: a systematic review. Cambridge Prisms: Global Mental Health, 9, 1–25. DOI: 10.1017/gmh.2021.48. Available at: https://pmc.ncbi.nlm.nih.gov/articles/PMC9806994/

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