AMRITSAR, Indian May 8 (Reuter): Cigarettes have to be sold wrapped in brown paper in India’s northern state of Punjab and shops selling liquor are guarded by police.

Cigarette vendors and government controlled liquor outlets are the frequent targets of arson attacks by Sikh freedom fighters.

It is not just the retail trade which has been affected’ by the frequent killings and daily clashes between police and freedom fighters demanding a separate Sikh homeland.

Hotels are almost empty, steelworkers have closed and the transport industry has been seriously hurt.

“Fear psychosis is hurting business. Nobody knows what is going to happen”, Chandigarh businessman Mohan Dhawan told Reuters. “No outside suppliers are prepared to send raw material on credit. They want payment in advance and that affects the liquidity of small businessmen”, he said.

Punjab is important center in textile manufacturers and small and medium scale light engineering industries.

Few businessmen, however, share the optimism of state Finance Minister Balwant Singh who says investment in Punjab has not been affected by the violence.

Dhawan said no fresh investment from individual entrepreneurs was coming in and the government was now trying to woo corporate investors.

“Big houses do not mind investing, especially if they are offered concessions and facilities. But small and medium investors cannot afford to take the risk”, he said.

Even the Finance Minister has admitted that the campaign against liquor shops had the potential to do serious damage.

There are 2,500 liquor shops in (the State, which are auctioned annually to the highest bidders. The auctions raise 2,500 million rupees (200 million dollars) and are the largest single source of the State’s 9,000 million rupees (720 million dollars) revenue.

Six hundred of the shops could not be auctioned last year because. they were in areas where attacks were likely.

Officials said that for the rest of them, the arson campaign meant that in a country where the constitution commits the state to a policy of prohibition, liquor in Punjab could only be sold with police protection.

Article extracted from this publication >>  May 15, 1987