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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

'Shariat' of Taliban.png

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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BROTHER FROM ANOTHER MOTHER

Sifat Kaur Cheema

"The line differentiating between banks and NBFCs is a fine one but has been blurred to a point where only a few can see the key difference between them; their distinction is the basis on which entire modern banking rests."

Banks and NBFCs both provide banking services but the question arises about the difference between the two.

Banks and Non-Banking Financial Companies (NBFCs) are the two major types of financial intermediaries in any financial system. The line between the banks and NBFCs is a fine one and it has been blurred to a point where only a few can see the key difference between them. Their distinction is the basis on which entire modern banking rests. We keep hearing the news that goes on describing how depositors have not been repaid by NBFCs like Infrastructural Leasing& Financing Services(IL&FS), Dewan Housing Finance CorporationLtd.(DHFL), Altico Capital and Banks like Punjab & Maharashtra Cooperatives(PMC) often overlooking the subtle difference between the deposits in banks and NBFCs.

To start with the basics, Banks are licensed by the RBI to engage in the business of banking whereas the NBFCs provide banking services without holding a banking license. Banks accept deposits repayable on demand but the NBFCs deposits have a lock-in period that is repayable after the maturity period. Unlike NBFCs, Banks issue cheques and they are considered as good as cash. To ensure that the banks live up to the trust reposed in them , they are subject to tough regulations like cash reserve ratio(CRR), statutory liquidity ratio(SLR), capital adequacy norms and other regulations including inspection by the RBI so as to ensure they are always able to repay their depositors and that too in full. In return for submitting to the tough regulations, the RBI acts as a ‘lender of the last resort’ in case of sudden liquidity problems or inability to meet the withdrawals. This is a crutch extended by the statutory body to the Banks which ensures the public faith in bank deposits. RBI even though a regulator and supervisor is not a lender of last resort to the NBFCs. Incase of Liquidity issues they do not have backing by the RBI. NBFCs are also nicknamed as the shadow banking sector.

The NBFCs have evolved tremendously over the recent years in the economy due to their innovative financial products and less stringent lending terms & procedure compared to the banks where they provide 100% loan amount even to lenders having a low credit score. This provides them with an edge over the traditional banks. The NBFC sector plays a critical role in powering consumption and ensuring credit flow to the auto, agriculture, real estate and the small and medium enterprises sectors which are essential and sensitive areas for boosting the Economy. Especially to attain the Government’s goal of crafting a 5trillion economy, investment flow is very crucial to these sectors by the NBFCs.

The most critical asset to any Financial Institution is confidence(of its creditors) which is pretty fragile. If it loses the confidence of its investors, it won’t take long for an FI to get into distress. When the crisis of confidence spreads, it has the potential to spread over the whole financial system itself. After the spark of a liquidity squeeze in the top NBFCs, there has been fear in the minds of market participants that it will spill over to the other NBFCs as well.

A way to grip the confidence in the NBFCs could be by the RBI taking a tough stance of monitoring them and the effective implementation of the policies the government has introduced like to provide a one-time six months' partial credit guarantee to public sector banks to buy high-rated pooled assets worth Rs 1 lakh crore from NBFCs.This will provide the much-needed liquidity flow to NBFCs. They can thus liquidate their portfolio and meet their liabilities in a timely manner. RBI has strengthened the regulatory framework of NBFCs by introducing a robust liquidity framework and proposed a liquidity coverage ratio for large NBFCs. The Centre has also issued new rules to bring NBFCs under the Insolvency & Bankruptcy Code(IBC) to help deal make them go through their insolvency and liquidation proceedings. These will help in reviving confidence in the financial system.

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