Liquor as Cash Cow for Milking by the  Government for Financing

Former Vice Chancellor Prof.M.M. Goel
– Prof.M.M. Goel*

Being needonomist as nationalist, I wish to draw attention of the stakeholders including 28 State and 9 UT governments for accepting the relevance of the liquor as a cash cow in giving considerable revenue for financing its activities and functions in the federal economy of India.

To implement Atamnirbhar Bharat Abhiyan (ABA), we should be honest to accept consumption of liquor   for the soul satisfaction of its consumer to be Atamnirbhar based on atma (soul) and the most potent instrument of reviving the state economies with excise duties.  I have been told that every bottle has a statutory warning that ‘consumption of alcohol is injurious to health’.

We have to ponder over the issues with honesty and leaving hypocrisy at bay. To understand the plight of the consumers of liquor, we have to avoid dry days which cost the government more than its consumers who are more rational when drunken to speak with honesty. Home delivery of liquor can take care of the needs of the time of lockdown and social distancing. One ration card for the entire nation with Aadhar Card is used for issuing the quota of liquor to the people as in military canteens.

As an expert on various selection committees, I have been asking a question to women candidates if some subordinate come drunk in the office, how you will deal the situation. My take on the problem of drunker during daytime is the non-acceptance by the family and whenever such a person gets the opportunity he do drink to be secret to the family. This is a management problem of dealing the issue with empathy and can be sorted out with ease by accepting and allowing a drink at home.

To be moral honestly, one has no right to encroach upon the lifestyle of the people who consume liquor and contribute to the economies of the respective states more than other consumers. It is interesting to observe that there is no agitation on the hike of the prices of liquor which is most suitable for the government for enhancing the revenues.

My first visit to USA in 1983 as GSE team member of the Rotary International provided me the opportunity to stay in American families who maintain a bar in their homes but this does not mean they drink too much. They simply ask the guest to drink anything once only and enjoy their drinks before dinner only. I have seen many cocktail parties of the students in HUFS, Seoul (South Korea) during my stay in its campus which used to start at 5 PM in the evening and finished at 5 AM. That too conveys that they do drink in limit and maintain discipline. Another experience, I wish to share that I received an invitation of a birth day party from my neighbour in HUFS with the note that ‘bring your own booze’ which is practically based on American culture. Meaning thereby it is their life style and it is immoral on our part to interfere as teetotallers.

Alcohol is currently outside the purview of Goods and Services Tax ( GST) and deserve to be brought under its domain with  well-defined mechanism  for refunding of taxes to the industry. In spite of GST not being levied on liquor, the prices of liquor continue to rise after its rollout. This is because the inputs used to manufacture liquor were taxed at 12-15% under the VAT regime before GST and post-GST, they are taxed at 18%. Alcohol was not brought under the purview of GST regime primarily due to two reasons including to ensure that the State Governments continue to have a strong inflow of revenue (other than what they get from GST). It’s estimated that taxes on liquor and beer fetch the state governments nearly Rs 90,000 crore annually.

 According to a report by the WHO, the consumption of alcohol in India has increased from 2.4 litres in 2005 to 5.7 litres in 2016 with 4.2 litres being consumed by men and 1.5 litres by women.  It is to be noted that per capita alcohol consumption in India has more than doubled from 2005 to 2016. According to a recent government survey ( February 2019), around 16 crore Indians in the age group of 10-75 are consumers of alcohol with Chhattisgarh, Tripura, Punjab, Arunachal Pradesh and Goa having the highest prevalence of the liquor use. Alcohol prohibition in India is in force in the states of Bihar, Gujarat, Mizoram and Nagaland as well as in the union territory of Lakshadweep. All other Indian states and union territories permit the sale of alcohol. I have been given to understand by my acquaintances in states implementing prohibition that it is available there with home delivery but very expensive more than double the price tag.   It needs to be noted that the Dietary Guidelines  recommend that if alcohol is consumed, it should be in moderation—up to 1 drink per day for women and up to 2 drinks per day for men—and only by adults of legal drinking age which ranges at different ages per region.  I have been told that every bottle has a statutory warning that  ‘consumption of alcohol is injurious to health’ .

To implement the social distancing and lockdown in letter and spirit, the state governments have to seriously introspect the issues including home delivery with morality. It has to be understood that to be moral, we should not interfere in the lifestyle of the people who may go to hell or heaven.  The eagle eyes of the Central Government can think of imposing GST and nationalise the sale of liquor for bringing under Central List.

To bring big change through ABA, we need small steps but continuously by creating consensus on the issues which otherwise leading to discontent. There is need of using the wisdom of professionals including economists (available in abundance in Haryana) as advocated by Dr. B.R. Ambedkar. For implementation of Fiscal Responsibility and Budget Management (FRBM) Act, there is a strong case for identifying alternative financial resources which can be generated by proper pricing policy of issuing birth certificate, marriage certificate and death certificates with at least 10 percent of the income of the working couple. There is a strong case for linking public utility services and fee structure with inflation rate. To make the economy shock proof, we need commitment, honesty and enthusiasm among all the stake holders. There is always a scope to improve the system with ease in doing business and ease of living.

For speedy revival of the economy, we have to replace fear with fearlessness and work without worries (www)- the real www in the virtual world wide web (www). A consumer (of liquor) as a hero of economics is always interested in a heroin (goods and services including liquor with the statutory warning) and all those who pollute the relationship are called villains in the real drama in the market. We have to understand, analyze and interpret the consumer psychology which is the study of why and how people buy things in the market including liquor (online and offline).

* Former Vice Chancellor and known as ‘Needonomist’ (economist for needs) among the fraternity of economists in India