THE LARGER ECONOMIC CANVAS

them in time, especially so as the Center itself is battling with a massive unbudgeted-for expenditure to battle COVID-19.

A few percentage points of state revenue and levy collections come from the sale of petroleum products, predominantly petrol and diesel oil. That’s also due to the fact that petroleum by-products such as naphtha and kerosene are heavily subsidized to keep the farm sector and rural areas going. And that’s the reason that the tail of the 40-day Lockdown 1.0 and 2.0 has been wagging the dog – the price of liquor, petrol and diesel have been given a jolt to shore up India’s weeping coffers.

Let’s look at some numbers from the larger economic perspective, from the blinkered vision of Indian states. The impact of Lockdown 1.0 and 2.0 alone on India’s GDP has been over $320 billion or around $8 billion in terms of daily flagel

lation. Against this numbing number, GST collections in March fell by around Rs 1,000 crore per day. The numbers for April will prove to be worse when they come in. The final nail in the coffin is that the cessation of liquor sales in the country for 40 days is resulting in excise losses of nearly Rs 20,000 crore across India’s states. And as excise inflows form a major chunk of states’ budgetary calculations, a dip in these receivables is a double-whammy, with most state coffers now having run dry, or getting perilously close to doing so.

As reported earlier in the ‘Mil

lennium Post’, liquor sector revenues form a major part of countrywide collections and enable Indian states to finance public welfare schemes, especially in times of national emergency, such as we are facing now. The absence of these revenues severely impacts the states’ ability to run welfare and alleviation programs. And the sobering truth is that alcoholic beverages make up an industry segment that does not see downturns, ever. In fact, crassly enough, the liquor sector prospers in tough times.

WHAT OF LIQUOR MANUFACTURERS?

Given the backdrop of reopening of vends, most assume that liquor manufacturers and retailers across the country would be delighted, but that is not the case. From their perspective, the mad rush being witnessed right now at liquor vends is the storm after the calm. Says the owner of a major liquor company, “What you are seeing is people who have been bottled up in cages for weeks on end, who are now stepping out in their hordes to reassert their independence, so to speak. This is not going to last. Given the ongoing pandemic and its fallout, the steep rise in liquor prices for the foreseeable future and the sagging Indian jobs and economic scenario, not many will be able to sustain these expenses for long.”

According to him, the Government’s decision to keep malls and pubs closed for the immediate future will also have a debilitating, cascading impact on the industry. And then, of course, the slowdown in the hospitality and airline sectors will have its natural fallout on the

liquor industry as well. So the rush of the last week could turn out to be a euphoric hurrah blip on the liquor sector radar, one to savour for a bit before the hangover sets in again.

REFUSING TO LEARN

FROM HISTORY

History is witness to the fact that whenever any State resorts to prohibition for political, cultural or other reasons, it always comes out loser. The United States opted for prohibition in 1920, with the intent of weaning out alcohol’s evils in society. The result was quite the opposite, with an alternate, illicit industry being born, the Government incurring massive revenue losses and corruption soaring. Some Indian states flirted with the same concept around two decades back and ended with similar results, nearly going bankrupt.

To tell the truth, all through Lockdown 1.0 and 2.0, liquor was available across the country at hugely inflated prices. The lockdown only managed to push prices to astronomical levels, 4-5 times the mentioned MRP, even as the legal excise collections of states went to zero. This six-week period saw black marketers and bootleggers make a killing, especially in a new India where alcohol consumption has been increasing year on year.

The profit-taking that the country’s lanes and by-lanes witnessed through illicit, black-market liquor sales through the last few days of March and all of April would have been better utilized by states had it reached their coffers. At least some of it would have percolated down to the people that matter – those who walked our highways for days and weeks to get back home, and those who work for state governments but have not been paid their April salaries as there is no money to pay them with.

Further, the mad rush we are witnessing today at liquor vends across the country would also have been avoided, as continued access to alcohol would have killed this frenzy we are witnessing today when shops are reopening after six dry weeks. Mind you, India is the only country of note, worldwide, that has seen

liquor sales being shut down for any period of time.

A NEW BEGINNING IS

BEING MADE

Having been wrung dry by the ravages of Lockdown 1.0 and 2.0, states like Chhattisgarh, Uttar Pradesh, Punjab and Himachal Pradesh are now quickly embracing the concept of online sales and home delivery of liquor. Hopefully, in the softer Lockdown 3.0, all of India will do so soon. And today’s India needs to, to avoid mindless queues and mayhem outside liquor vends and ensure that physical distancing norms are not made a mockery of in these terrible times. Home delivery of online orders will not only ensure easier access to liquor for the masses that are spending real money on their indulgence but it will also generate desperately-needed cash-flows for state governments.

The National Capital has made a beginning of sorts too by issuing e-tokens last week for queueless liquor sales in Delhi, even though the first day of its implementation saw some teething prob

lems. Keeping these in mind, the Hon’ble Supreme Court asked the Delhi Government to consider online bookings and home delivery of liquor products. If this happens, Delhi may soon be on its way to overcoming the problems being faced at vends.

Inevitably, these new sale options will become the way of life in the new India, one in which alcohol and related products will soon make it to the list of essential commodities. Such a move will provide succour to those who like their daily liquid fix. But more important, it will fill up the coffers of the authorities and keep the administrative machinery moving – moving to fight this battle that is sure to confront us for a long time.

Put together, India’s state governments net over Rs 150,000 crore annually in excise collections alone from liquor sales