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April 7, 2020COVID 19: A Time to Rethink Kerala’s Liquor Policy
Liquor dependence is not just a problem of the consumers in Kerala, but a problem of the State government too. Each time, during a crisis, and many times even without a crisis, any policy on liquor has often led to an exhibition of multiple withdrawal symptoms by both the consumers and the State. Just as the State government plans mediation and de-addiction centres for individuals, it also needs to consider de-addicting itself from excessive dependence on liquor. The problem presented by Kerala is simple. Excessive dependence on liquor as a source of revenue by the State has led to the sector being a favoured goose laying golden eggs. In addition, the State had developed a complacency after monopolising the sector and trying to squeeze the consumers with high tax rates. All this turned upside down when ultimately a crisis like COVID-19 challenged this complacency. Time is now ripe for Kerala to develop a policy to avoid panic responses during a crisis.
At present, the State of Kerala is dealing with the unprecedented COVID-19 pandemic on a war footing. The number of tested individuals and the number of cases that are positive in Kerala are one of the highest in India. As of now, two deaths were reported and approximately 250 plus cases were tested positive. The numbers are bound to increase. Amidst this, Kerala is also trying to deal with a financial crisis. The impact on the economy is likely to be severe following the current crisis, considering the additional funds required to wither the pandemic. Sale of liquor, one of the major revenue sources of the State, has also been curtailed given the prohibitory sanctions and closing down of outlets. There are approximately 301 liquor outlets across 14 districts controlled by the State and numerous bars and hotels and beer parlours selling liquor. The revenue from the sale of liquor has been close to Rs 14,000 crore for Kerala during the financial year 2018-19. During the last four years, it was approximately Rs 45,000 crore. This unsurprisingly made the government consider it as an essential commodity during the initial phase of the pandemic.
The government had to revoke its stance and consider withdrawing liquor as an essential commodity amidst protests to shut these outlets during the lockdown. However, what worried policy makers was that the death toll from the lack of availability of liquor (reportedly 9) has been more than the number of people who died from COVID-19 in the State. Most of the liquor related deaths were suicides (although it should be noted that the State has been in the forefront in the reported number of suicides in India). Kerala Mental Health Survey reported that approximately 0.6 per cent of the population in Kerala is liquor dependent. This counts to nearly 2,00,000 people. The suicides reported among the addicts in the present situation are only a very small per cent of the total number of liquor dependents (approximately 0.0035 per cent). This is not meant to reduce deaths to fractions or to make them seem trivial. However, it highlights that the State government’s decision to improve liquor availability through medical certificates to dependent adults based on these numbers does not rest on a firm footing. In addition, there are also other prominent health issues faced by individuals which remain forgotten during these discussions.
Given these facts, three questions loom large. Here, an attempt is made to understand these questions and provide possible answers to them.
First, have these sanctions during the pandemic really reduced the availability of liquor in the State? The best hypothesis would be based on an analogy with the State of Gujarat. As in the case of Gujarat, which has apparently been a dry state on paper for so long, the lockdown in Kerala has only produced an impression of liquor unavailability. While production seemed to have stopped, the unsold reserves indicate product availability and hence a black market for these products. Bootlegging is also rampant.
Second, who are the individuals affected by the lack of availability of liquor? It has been reported that black marketers in the State charge exorbitant prices from the consumers. The lockdown has affected the price mechanism where the supplier now decides the price and the demander is obliged to pay. The suicides reported are likely to be extreme cases where the demanders were driven to such a state when their access to liquor was restricted by unaffordable prices.
Third, do we need to prioritise public policy only when a crisis happens or should we take into account the effects of excessive dependence and monopolising of specific sectors by the State even before a crisis occurs? This is a serious question which our State government should consider. The government needs to treat its withdrawal symptoms immediately rather than at a later stage when another crisis pops up. It should slowly withdraw from its over dependence on alcohol and find a better source of revenue. A near-term policy should orient the State towards such an action.
The big question is who needs to free itself from liquor addiction: the individual or the State? If the State is serious about this issue, it needs to create a more competitive environment for business by demonopolising the liquor industry. The State government can do better by enforcing rules which provide affordable and quality products to the consumers in a competitive market environment and allow them to choose. Until this is done, consumers need to be expectant and wary of further knee-jerk reactions from the monopolist (State) in the long-run.
Views expressed are personal and need not reflect or represent the views of Centre for Public Policy Research.
Rahul V Kumar is a Research Fellow at CPPR. He has an MA in Economics and an MPhil in Applied Economics and International Relations from Jawaharlal Nehru University (New Delhi). Currently, he teaches graduate students.
1 Comment
Basically we need to analyse not only the income government gets but also the pressure on the health system, househods, crime rates, loss of productivity due to excessive drinking. .And of course from the industry point of view-the investments, employment and opportunity cost .I think this requires a broader study based on backward linkages to grains and fruits etc.