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
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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?
. . .
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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.
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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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MONETARY POLICY IN COVID-19 ERA
The Department of Economics, Hindu College, organised an insightful webinar on 28th January 2022 on the topic ‘Monetary Policy in Covid-19 Era’, which was addressed by Prof. Chetan Ghate, Indian Statistical Institute, Delhi.
After a welcome address by Dr. Nidhi Dhamija, Teacher-in-Charge, Department of Economics, the webinar progressed. Prof. Ghate, in his presentation, recognised the unanticipated and deep Covid shock on the Advanced Economies (AEs) and the Emerging Market Economies (EMEs) and thus drew parallels between the US Economy and the Indian Economy as well as between the Great Financial Crisis (GFC) of 2007-08 and the Covid crisis to examine the implications for the monetary policy in a post-Covid-19 era.
Starting by highlighting the basic differences between the GFC and Covid, that while the former was caused by the deregulation of the financial markets, the latter was itself a public health emergency, Prof. Ghate focused on the present deterrents faced by the Central Banks of the AEs and the EMEs which included - a halt in the functioning of the economy, distributional impacts that might pertain to the externalities of the monetary policies and ultimately the reassessment of the monetary policy as a whole. After a brief explanation of scarring as a process, it was taken into account that ‘cloud computing’ has emerged as a much beneficial tool in the virtual world of today.
The professor, after acknowledging the financial markets as “brains” of the economy, dived deeper into the US experience, underlining the causes of the GFC (low-interest rates, burst of housing bubble, increased securitisation, deterioration in balance sheets of financial institutions, policy errors, etc.) and thus explained that having confronted such a crisis, the FED (Federal Reserve System or the FED) of the US did not allow the Covid pandemic to turn into a financial crisis and instead used an aggressive set of policy actions - lowering FED funds rate, buying long term bonds, expanding the fiscal policy to about 25% of the GDP, establishing lending facilities, etc. to stabilise the economy. Prof. Ghate also recommended the book, “Firefighting: The Financial Crisis and Its Lessons”, by Ben S. Bernanke, Henry M. Paulson and Timothy Geithner as a must-read for all the students studying economics.
Moving on to the next slides, Prof. Ghate made use of a bunch of statistical tools to showcase the preliminary challenges faced by India - limited monetary policy, pre-existing debt vulnerabilities among others as well as by the EMEs (in comparison to the AEs) such as inflation, limited fiscal support in response to Covid pandemic, etc. Determining the monetary policy challenges in a post-Covid era, the professor recommended the Central Banks (CBs) to take much broader tools into account for the monetary policy for unwinding the balance sheets (by selling purchased assets) to hence achieve financial stability.
Prof. Ghate, while summarising on India, accepted that the recovery from the Covid crisis won’t be a straightforward path but rather a gradual process. He then advocated for structural reforms, treating the Health sector as an “investment” rather than a “spending”, expanding the trading routes and eventually implementing fiscal policy in a way that debt goes on declining. Instead of the ‘Debt to the GDP’ ratio, the ‘Debt Service to the GDP’ ratio should be given more significance for the same.
After a brief question and answer session, the enriching webinar concluded with Jai Sharma, President, Student Body, Department of Economics, presenting a vote of thanks to Prof. Chetan Ghate.