Dealing with India’s drinking
More controls, higher prices won’t help. A liberal regime will
On the first day of India’s third phase of the lockdown — where substantial relaxations were introduced — there was a degree of chaos. And nothing symbolised this more starkly than the long queues, the rush, the jostling, and the quarrels in front of liquor shops. It almost appeared that after 40 days, India was ready to party. However, the violation in social distancing norms worried governments considerably. Indeed, it opens up the possibility of a greater spread of the coronavirus disease (Covid-19), and squandering away of the gains made so far.
There have been a variety of responses to this chaos. But the sharpest came from the Delhi government. Chief minister Arvind Kejriwal, rightly, issued a warning that if violations continued, he will have to reintroduce restrictions. On Monday night, the government also imposed an extra 70% corona(virus) tax on liquor. Andhra Pradesh has hiked liquor prices by 75%. One may, intuitively, think of this as a wise measure. Governments aim to meet two objectives with higher prices. The first is to disincentivise people from lining up and purchasing alcohol, and thus controlling crowds. The second, at a time when state public finances are under great strain, is to ramp up extra revenues.
But this is a mistake. One, there is a clear class bias in the decision because making alcohol expensive is unfair on the poor, while those with resources will continue to purchase alcohol legitimately. Second, it is not going to necessarily stop those who cannot afford the legitimate prices from drinking. Examples from states which have imposed prohibition show that there is an immediate parallel economy that springs up — and a nexus between those who deal in illegal liquor and crime flourishing. Three, illicit liquor also has serious public health implications, and can lead to a sudden rise in hooch deaths. And four, if revenue generation is the aim, hikes have to be reasonable and proportionate. Seventy per cent is excessive. In fact, governments need to recognise the surge in demand — and reform and liberalise alcohol sales. Allow more shops to engage in the liquor trade; allow online delivery — and the increase in volumes will lead to higher revenues. All of this, of course, must be done along with instituting more strict measures for social distancing at shops, and holding liquor vendors and citizens responsible. Indian political leaders have had an uncomfortable relationship with alcohol. However, the solution does not lie in more controls and prohibition, but a more liberal regime with regulation.