According to state Finance Minister Abdul Rahim Rather, the government earned Rs.242 crore (Rs.2.42 billion) in 2007-08, Rs.211 crore in 2006-07 and Rs.203 crore in 2005-06 from liquor duty, a major source of revenue. This includes the liquor consumption in Jammu and Ladakh regions where there is no ban.

Liquor baron Vijay Mallya had proposed early this year to restart cultivation of hops - used in the manufacture of beer - in Kashmir but the plan was shot down by Chief Minister Omar Abdullah who said 'religious sentiments of people' were important.

Abdullah's response followed a huge public outcry over Mallya's plans. Muslim clergy and moral vigilantes have been on a mission to stop liquor in Kashmir, though the sales figures are an indication of their failure.

Militant outfit Allah Tigers had issued a blanket ban on the sale and consumption of liquor in 1989 when insurgency erupted in Kashmir. Many liquor shops were ransacked and looted, forcing them to shut down.

The liquor ban had also hit the tourism sector hard.

'The ban on liquor sales indeed affected the tourism sector in Kashmir as alcohol had to be served secretly to guests. But with the sales going up, we hope the word spreads that the scene is not that bad in Kashmir,' said Majid Iqbal, a hotelier in Gulmarg.

'Earlier, we were very secretive about serving drinks, but now we could serve it on order though we don't stock it in our bar.'

(Sarwar Kashani can be contacted at s.kashani@ians.in)