The lovely tale of Liquor
during Lockdown and before
At every stage, addiction is driven by one of the most powerful, mysterious, and
vital forces of human existence. What drives addiction is longing —
a longing not just of brain, belly, or loins but finally of the heart.
Cornelius Platinga
The use of alcohol in India for drinking purposes dates back to somewhere between 3000 and 2000 BC. An alcoholic beverage called Sura which was distilled from the rice was popular at that time in India for common men to unwind at the end of a stressful day. . Yet the first mention of Alcohol appears in Rig Veda (1700BC). It mentions intoxicants like soma and prahamana. Although the soma plant might not exist today, it was famous for delivering a euphoric high. It was also recorded in the Samhita, the medical compendium of Sushruta that he who drinks soma will not age and will be impervious to fire, poison, or weapon attack. The sweet juice of Soma was also said to help establish a connection with the gods. Such was the popularity of alcohol. Initially used for medicinal purposes, with time it evolved and became the beverage that brought life to social gatherings, and eventually consuming alcohol has become a habit for many.
With such a rich history of not just humans but also of the gods,
what is a worldwide pandemic to stop anybody from drinking?
. . .
According to a report released by the World Health Organisation (WHO) in 2018, an average Indian drinks approximately 5.7 liters of alcohol every year. In a population of casual and excessive drinkers, with the shutters of liquor stores down, it must have been extremely difficult for “certain” people to survive lockdown. In the first two phases of lockdown, the desperation had quadrupled prices of alcohol in the Grey Market of India. Also, According to Google Trends, online searches for “how to make alcohol at home” peaked in India during the fourth week of March, which was the same when the lockdown was announced. As a consequence, a few people died drinking home-brewed liquor. People committed suicide due to alcohol withdrawal syndrome. Owing to the worsening situation and to reboot the economy, some states decided to open licensed liquor stores in the third phase of the COVID-19 Pandemic lockdown in India. This decision was the worst best decision the state governments could take. The kilometer-long queues in front of liquor stores were evidence that a pandemic can turn your life upside down yet your relationship with alcohol cannot move an inch.
The love in the hearts of those who are addicted was explicit. We might have seen addiction, we might have witnessed desperation but what happened in the month of May was madness, not just in terms of the way people pounced but also in the way the government earned. According to a report by Hindustan Times, on the first day of the third phase of Lockdown, the Indian state of Uttar Pradesh recorded a sale of over Rs 100 Crore from liquor. On the second day of the reopening of Liquor stores, Karnataka reported sales of 197 crores in a single day which was the largest ever. Eventually, the prices of Liquor were hiked to 100% to discourage people from drinking.
. . .
There was a special corona fee that was imposed in Delhi by Chief Minister Arvind Kejriwal. A 70% corona fee was imposed in Delhi, yet the sales did not drop. The entire situation was a disaster for the law enforcement officers, social distancing was easily abandoned and a basic code of conduct was happily violated. Despite the chaos created, the states continued to collect revenues. Home delivery of alcohol was allowed in Maharashtra and e-tokens were sold in Delhi.
Demand for liquor is inelastic which means that
the sale of alcohol is not much responsive to change in prices.
In general, since alcohol policy is a state subject in India, revenue from Liquor is a cash cow for state governments. In 2018 and 2019, four states collectively collected about 20,000 crores in taxes from the sale of liquor. As much as the state earns from the sale of Liquor it is undoubtedly, a threat to the Economy. Consumption of alcohol has dire health consequences. When a person consumes an alcoholic beverage, there is a rise in BAC because of which there is a gradual and progressive loss of driving ability because of an increase in reaction time, overconfidence, degraded muscle coordination, impaired concentration, and decreased auditory and visual acuity. This is known as drunken driving. (V. M. Anantha Eashwar, 2020) Drunken driving is the third biggest cause of road accidents and over speeding in India. Road accidents are not it; alcoholism causes sleep problems, heart, and liver issues. Also, it is not about an individual’s life, it ruins the lives of all people concerned.
Addiction also causes economic loss. In 2000, Vivek Benegal and his team assessed 113 patients admitted to a special de-addiction service for alcohol dependence. They found that
the average individual earned a mean of ₹1,661 but
spent ₹1,938 per month on alcohol, incurring high debt.
They also found that 95% did not work for about 14 days in a month. They concluded that it led to a loss of ₹13,823 per person per year in terms of foregone productivity. A more recent study, Health Impact and Economic Burden of Alcohol Consumption in India, led by Gaurav Jyani, concluded that alcohol-attributable deaths would lead to a loss of 258 million life-years between 2011 and 2050. The study placed the economic burden on the health system at $48.11 billion, and the societal burden (including health costs, productivity loss, and so on) at $1,867 billion. “This amounts to an average loss of 1.45% of the gross domestic product (GDP) per year to the Indian economy,” the study said. (Mint, 2020)
Setho ka Gaon
With each passing day, the ‘curtain of separation’ weighs down on the women of Afghanistan, paving the way for tyranny to thrive.
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अर्थ IN FOCUS
From 5% economic growth to a $5 trillion economy
It isn't incorrect to say that the festive season came early for Indian Incorporated and Bourses after the Centre slashed effective corporate tax to 25.17% inclusive of all cess and surcharges for domestic companies. This move has put India's tax rate at par with its Asian peers and boosts efforts to attract investment.
Growth slumped to a six year low of 5% in the first quarter of the current financial year consequent of the economic slowdown the centre repeatedly gives a cold shoulder. The new rates announced by the Finance Minister Nirmala Sitharaman on September 20 is by far the biggest and boldest step to revive the Indian economy. The goal is to turn the economy into a rendezvous for investors, demonstrating the governments intent to walk its talk.
The earliest signs of the worst declaration of the economy can be traced back to the auto-sector slowdown. Official national income confirmed these fears. The growth rate observed in April-June 2019 was 5% this year steadily declining from 8% in the same quarter last year and 5.8% in the previous quarter implying that people are putting off purchases. Society of Indian Automobile Manufacturers (SIAM) data shows that passenger vehicle sales declined 18.42% during April-June while vehicle sales across all categories declined 12.35% compared to last year. In addition to the slash in tax rates the government also rolled back some of the controversial measures introduced in the federal budget for 2019-20 including the enhanced surcharge levied on capital gains made by Foreign Portfolio Investors investing in India's equity markets.
We can certainly expect a change of scenario in the Corporate Dynamics. For one given the substantially lower rates would imply that many firms will break even prior to their set targets, this should ideally also result in higher profit margin which would take the form of lower product prices for consumers. But these facts cater only to the supply-side of the issue, the question arises as to how it would help revive consumer demand?
Although lowering corporate income tax rates addresses the supply side issues. These could also raise consumption demand through what is called the 'wealth effect', a behavioural phenomenon where consumers start spending more because of greater confidence driven by higher values of their financial and physical assets.
The biggest reduction in 28 years is just a step in the series of others to reinvigorate the economy.
Saudi Oil Crisis
Multiple drone attacks on Aramco’s oil refineries took place in the early hours of September 14, 2019. The Abqaiq processing facility and the Khurais oil fields, two of the most important ones in Saudi Arabia, were hit in what is speculated to be an attack by Iran. While the Houthi rebels from Yemen claim to have conducted the strikes, Iran denies any involvement. However, the technological advancement of the drones makes it seem unlikely that the Houthis were behind the strikes.
Since Saudi plays an important role in stabilising global prices of crude oil, the attack has tremendously changed the global market. Besides being a cause for a growth in geopolitical tensions, the strikes might prove to have a significant impact on the world economy. Being one of the largest producers of crude oil, the attacks would greatly affect supply, taking into consideration the fact that countries have been relying on Iraq and Saudi Arabia in order to compensate for Iran's supply shortage due to US imposed sanctions.
The attacks costed the kingdom about 5 million barrels of oil output, which is roughly equivalent to half of its daily production. As a result, there was a spike in world prices of different varieties of crude oil - the estimates showing a fluctuation of nearly 20% in one day.
Saudi claims to have partly restored its output since the attacks and that its supply would not be affected as the kingdom is it tapping reserves. However, unstable geopolitics in the Gulf region seem to keep the energy markets volatile.
This event highlights an interplay of numerous forces on a global scale. The triangular conflict between US, Saudi Arabia and Iran is significant, since the imposition of sanctions over Iran by the US after the attacks, coupled with growing rivalry between Saudi and Iran, point towards greater trouble. The underlying power of American hegemony over the global economy and polity is a pressing problem. Besides tensions in the international arena, decisions dealing with internal circumstances are also being questioned as Saudi’s failure at protecting it's most valuable economic asset raises doubts.
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