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.
Arth
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DECEMBER'S DEADWEIGHT LOSS
Urvi Sikri
Christmas has never been just for the Christians – brown families buy Christmas trees from their proximate Just99 shops, someone is inevitably humming Silent Night or Last Christmas (technically not even a carol), special assemblies at schools enact the birth of Christ (this author’s school had its geography teacher dress up as Santa throwing toffees around the school ground on a motorcycle), offices organise Secret Santa style gifting. Christmas is, after all, as Dickens writes, “a good time; a kind, forgiving, charitable, pleasant time; the only time I know of, in the long calendar of the year, when men and women seem by one consent to open their shut-up hearts freely.”
The opening of these shut-up hearts involves ritualistic gift giving – and this is where economics comes in to rain on the Christmas parade. Joel Waldfogel, Professor of Economics at Yale University, in his 1993 paper published in the American Economic Review, estimates the deadweight loss from Christmas gift giving to be between $4 billion and $13 billion. Compare this to the deadweight loss of taxation as estimated by Browning in 1976: $50 billion. How has Waldfogel arrived at this rather morose and un-Christmas-ey DWL estimate?
When you purchase a gift, you are making a consumption choice for your friend – if this does not map to your friend’s preferences, your holiday gift giving will become a potential source of deadweight loss.
Waldfogel presents this idea using indifferent curves – with the gift on the x-axis and all other goods in dollar terms on the y axis. Consider point I: this is the initial position before your friend has received your gift, with utility U0. Now suppose you are planning on spending $x on your friend’s gift – you decide to skip the crowded market and instead hand your friend cash. This shifts your friend’s budget constraint to bb’: he moves to point II on bb’, with utility U1.
Now suppose you decided to do your Christmas shopping before the holiday crowds and you do purchase a gift good, then your friend receives your gift and arrives at Point III. Note that this point is also on the budget constraint bb’: however, the corresponding utility is U2, which is less than U1. Point III is not an efficient outcome – your friend would have reached U2 with a cash gift of less than $x. The deadweight loss in this situation is the distance cb: the cost of the gift (ab) less the minimum expenditure required to reach U2 (ac).
Based on this simple model, Waldfogel conducted two surveys among his undergraduate microeconomics students. The first survey was aimed at understanding what is the maximum that the respondent would pay for his/her gifts:
Estimate the amount paid by the givers to purchase the gifts the students received in the 1992 winter
If the students were to buy the gift good themselves, what would be the willingness to pay?
The second survey not only asked the respondent to categorise the relationship with the gift giver (significant other, parent, grandparent, etc), but also to ascertain what is the minimum that the respondent would be happy with instead of receiving the gift. Questions included:
Describe each individual gift – cash/ gift certificate/ gift good.
Estimate the amount of cash such that you are indifferent between the gift and cash.
In case of exchange, assess the value of the good you got in exchange/ write in the cash amount.