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Opinion

Time for sobriety

A balance between securing revenue gains from alcohol and preventing socio-economic fallouts of the same can be attained through an improvised business model

Time for sobriety
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Along with increasing urbanisation and rise in incomes, demand for alcoholic beverages too seem to be growing exponentially in India. Attraction towards liquor, actually addiction, is so powerful that even the pandemic failed to dissuade people from buying their favorite booze, as they stood in long queues in hot sun, when lockdowns were lifted last year. According to WHO, with nearly 30 per cent of men between the 15-65 age group addicted to drinking, alcohol consumption in India has increased from 4.3 litres per person in 2010 to 5.7 litres per person in 2016. Indian Council for Research on International Economic Relations (ICRIER) reports that the number of consumers of liquor has increased from 219 million in 2005 to 293 million in 2018, and it is further expected to reach 386 million by 2030.

Alcoholic beverages industry offers substantial support to the economy by creating around 15 lakh jobs and generating USD 49 billion as revenue. India is a fast-growing market of alcoholic beverages, estimated at USD 53 billion in 2020 and expected to grow by a CAGR of 6.8 per cent by 2023. As per official figures, production of alcoholic beverages increased by 23.8 per cent between 2015-16 and 2018-19. Nevertheless, the robust growth of the sector comes with high prices; the disastrous consequences of alcohol pertaining to health and safety of people and state of society in general are too prominent to be underplayed.

Alcohol is held responsible for around three million deaths per year across the world and is the main causal factor for cancer, liver cirrhosis and cardiovascular diseases. In 2017, alcohol was found to be the only reason for more than 5.8 lakh deaths in India through tuberculosis, road injuries, and self-harm. Gaurav Jyani et al projected that between 2011 and 2050, alcohol would be responsible for 258 million deaths, and in contrast, 552 quality-adjusted life-years (QALYs) can be earned by eliminating the same. The study also projects that the social burden of alcohol for India in terms of spending on health and productivity losses, will be around USD 1,506 billion — amounting to a loss of 1.5 per cent of the GDP. The social consequences are no less worrisome. Alcohol consumption often results in domestic violence which psychologically affects the children and disrupts the family growth. Besides, it drains away family finances, leading to impoverishment. Benegal et al found that around 60 per cent of families are supported by income from other family members. Alcoholic influence is found to be a precipitating factor behind crimes against women, such as physical or sexual assault, exploitation or even murder. While public nuisance by drunken men disturbs peace and tranquility of society, the invisible role played by liquor during polls can be a topic for another day.

Dealing with alcohol has always been a tightrope walk for governments since the predicament is to ensure health and safety of people while at the same time protecting their basic freedoms. It is a catch 22 situation that almost all governments had to concede their failure to eliminate alcohol completely. Prohibition had been proved to be a flop measure even in the US, Canada, the UK and in many European countries. In India, out of the 29 states, prohibition is in force in only four states — Bihar, Gujarat, Nagaland and Mizoram. It's a paradox that on one hand, enormous allocations are made for public health annually, while on the other hand, sale and consumption of alcohol is permitted with little or no restrictions. Perhaps the economics of alcohol dissuades the governments in regulating liquor with an iron hand, for there is a huge revenue in the deal. Let's not forget that when shops of essential goods were permitted to open during the lockdowns, liquor shops too were permitted subsequently as states needed revenue. India's earnings through excise duties on liquor are reported to be more than those of the UK (USD 10 billion) and the US (USD 13 billion). According to an RBI report, state excise duty constituted 10-15 per cent of tax revenues for the majority of states and liquor has been the second largest source of revenue after sales tax. It is no wonder then states succeeded in keeping liquor out of GST. The combined provision of revenue from liquor in the budgets of all states in 2019-20 was of Rs 1,75,501 crore — 16 per cent higher than that in 2018-19; on an average, it was about 15,000 crore per month.

Revenue from sale of liquor is unfortunately a 'necessary evil'. Nevertheless, the long-term impact of alcohol on people and society remains a cause of worry. 'What cannot be cured has to be endured' they say; but the challenge is not insurmountable either. Wisdom lies in converting our weakness into strength and disadvantage into advantage. Perhaps a mid-path that allows industry to flourish, assures revenue to the state, and also ensures the wellbeing of society, is all that we need.

Prohibition has never been a permanent solution as it only encouraged bootlegging. Likewise, hiking the price is of no avail as pricing and demand have no inverse relationship in the alcohol market. Even the 70 per cent 'special corona fee' imposed by Delhi couldn't deter the drinkers. The only way forward is to ensure responsible consumption with awareness. Firstly, a comprehensive social marketing strategy is required to bring about attitudinal changes. Today, awareness about alcohol vis-à-vis tobacco is negligible in people. The IEC models from the successful anti-tobacco campaign in the country are worth emulating. According to Global Adult Tobacco Survey-India (GATS-India), thanks to the warning campaign against tobacco, propensity to consume has declined by 41 per cent for smoking and 81 per cent for smokeless tobacco in India. Pictorial warnings of dissuasive nature, like the ones seen on tobacco products, are absent on liquor products. The 'Swachh Bharat' campaign made history by creating unprecedented mass awareness on sanitation in India. Perhaps we can learn a thing or two to help design effective awareness drives around alcohol.

Secondly, in the larger interest, a uniform regulatory mechanism is essential. There is a tremendous potential in the sector for both domestic and international trade. With growing product premiumisation, consumption by middle- and low-income consumers has gone up phenomenally, and production by 2030 is expected to grow by around 70 per cent. But in spite of potential for competing in the global markets, India still is a small player with only 0.27 per cent share in exports, ranking 32 — much below many developing countries. Even a small country like Chile is a leading exporter of alcohol beverages. Issues that impede growth need to be addressed. To begin with, lack of a uniform regulatory system, high tariffs, cess and state-level non-tariff barriers are major obstacles for trade agreement with international partners. It defeats the spirit of 'Make in India'. State-specific regulatory barriers created only a glorified anarchy as different states have different ways of doing business — distributor model, corporation model, wholesale model and direct (company) model. Requirement of multiple permits reduces the ease of doing business. As alcohol is kept out of the purview of GST, price control mechanisms became state-centric and variation in methodologies only encouraged illegal trade between states.

Finally, though a state subject, but owing to its monumental impact on the health of people, socio-cultural values and the economy, the alcohol sector acquires national importance. Necessary interventions are required to revamp the existing business models in order to address various concerns. It goes without saying that cooperation from states holds the key.

The writer is a former Addl. Chief Secretary of Chhattisgarh. Views expressed are personal.

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