Editorial 1 : The cost of ambivalence
Introduction: Most newspapers reported a record-breaking sale of alcohol around Diwali this year. Many Indian states has different policies regarding sale of alcohol (some of them prohibit, some of them regulate). There seems an inconsistency in states’ policies on alcohol sale.
How much alcohol consumption is good?
- Medically, alcohol is considered harmful based on its being a risk factor for heart disease and its impact on the liver.
- For a long time, medical professionals and the WHO held that moderate alcohol use is good for health, based on Western data.
- The medical profession has traditionally not been vocal on alcohol control and the way they throng alcohol counters in medical conferences indicates that doctors endorse alcohol use.
What is the societal limit of alcohol abuse?
- The societal definition of abuse is when one is not able to discharge one’s role or becomes a nuisance to others in the family or society regularly.
- Only when the externality of its impact on others (domestic violence, traffic accidents, family impoverishment) becomes pronounced, do we call it an issue worthy of a public response.
- If an individual suffers due to alcohol use disorder — say with cirrhosis of the liver — the attitude often is that no sympathy should be wasted.
- Most national surveys in the last five years show that around 20-25 per cent of men and 1-2 per cent of women consume alcohol and one in five of them are dependent or indulge in harmful use and need treatment.
- Women have generally been at the receiving end of alcohol use by men. That is why most social protests around alcohol have been women-led.
Hypocrisy in the consumption of alcohol in Indian society
- Our thinking is that the rich can choose to do whatever they want but the poor should behave responsibly as they cannot afford this habit.
- Upper castes equate alcohol use with “tamasic” food, taking a moral high ground, while most tribal societies openly embrace it.
- Many Indians, including those from upper castes, consume alcohol at home but not publicly — a clear sign of hypocrisy.
- A politician, more so a woman, drinking alcohol is seen as irresponsible, even though it may have no impact on his or her performance.
- Some consider alcohol as a corruption brought in by Western culture, despite enough evidence that it has always been a part of our culture.
- Alcohol use has always been seen from a religious lens.
- While Islam forbids its consumption, Christianity is seen as permissive, nothing in Hindu religion bars alcohol consumption.
- Many religious sects prohibit its consumption.
- A balance has been struck by society by proscribing it on some days and allowing it on others.
WHO’s recent change in limit for alcohol consumption
- In recent times, the WHO has changed its policy of “some alcohol is good” to “no alcohol is good”, following pressure from public health and activist groups.
- In 2013, when global targets were being set, WHO and some countries opted for a 10 per cent decrease in harmful use of alcohol.
- India opted for a 10 per cent reduction in alcohol use — not just harmful use of alcohol.
Some examples of inconsistencies in states’ policy on alcohol consumption/sale
- Haryana, for example, after experimenting with prohibition in the 1990s, today has a licencing system that has resulted in alcohol vends every few hundred metres in Faridabad and Gurgaon.
- These measures have been driven by the revenue generation potential of alcohol sales.
- Delhi and Haryana have often competed by revising state taxes. Delhi’s controversial alcohol policy, revoked last year, allowed vendors to give discounts.
- Kerala is another example where the need for revenue generation resulted in the state government stepping back from partial prohibition.
- The Tamil Nadu government, learning from multiple hooch tragedies, has gone into the business of selling alcohol through its State Marketing Corporation to ensure citizens’ safety.
- Most states are not ready to get alcohol into the GST scheme as they fear foregoing revenue.
- Prohibition in Gujarat is a Gandhian legacy that no one wants to fiddle with.
- Mizoram, a Christian-majority state, has imposed prohibition and recently, following protests, allowed local wineries.
- India has developed the concept of official “dry days” — when the sale and public consumption of alcohol is banned, mainly on religious grounds, and salary days.
- These days get notified so that people can buy in advance and are not inconvenienced.
- Neither the politicians nor the bureaucracy have health at the core of the policy.
What policies can be adopted to curb the abuse of alcohol consumption?
- A public health approach to curb alcohol use follows the approach for tobacco control like limiting access (licensing and age bar on sale), raising tax, prohibiting marketing and raising awareness.
Weaknesses in the enforcement of regulatory policies
- The enforcement of regulatory policies is quite weak.
- Though advertising bans are in place, alcohol firms have flouted them, including in the ongoing cricket World Cup, by using surrogate advertising.
- Governments have looked away.
- This violation can be addressed by an appropriate legislative remedy, but governments have not shown any intent to do so.
Conclusion: Addressing this ambivalence and hypocrisy needs open and non-judgemental discussions in society. The false dichotomy between traditionalism and modernism, the professed role of religion and trade-offs between health impact mitigation and revenue generation need to be debated.
Editorial 2 : A wider gap
Introduction: According to the official trade data released for October, India’s trade deficit hit a record high in October.
India’s import and export numbers
- The merchandise exports grew by 6.29 per cent while the merchandise imports grew by 14 per cent.
- In absolute terms, in October, India exported goods worth $33.57 billion while importing goods worth over $65 billion.
What is trade deficit?
- A trade deficit refers to the excess of imports over exports in a country that trades with the rest of the world.
- While any developing economy, such as India, typically has a gap between its exports and imports — with imports leading the exports — the quantum of this gap and what is causing it are key to reading trade data.
- The trade deficit should ideally not become too high, especially in relation to the overall size of the economy (gross domestic product).
Factors contributing rise in trade deficit
Several factors can contribute to a rise in a country's trade deficit. These factors can be broadly categorized into economic, structural, and policy-related factors.
Economic Factors:
- Strong Domestic Demand: A strong economy with growing consumer spending can lead to increased imports of goods and services, widening the trade deficit.
- Exchange Rate Fluctuations: A weakening of the domestic currency relative to foreign currencies can make imports cheaper and exports more expensive, further exacerbating the trade deficit.
- Savings and Investment Gap: A low domestic savings rate combined with high investment demand can lead to increased borrowing from abroad, which can finance imports and widen the trade deficit.
Structural Factors:
- Comparative Advantage: When a country specializes in producing certain goods less efficiently than its trading partners, it may import those goods at lower costs, leading to a trade deficit.
- Supply Chain Disruptions: Global supply chain disruptions can hinder domestic production and increase reliance on imported goods, contributing to a trade deficit.
- Technology Lag: A lack of technological advancement in certain industries can make domestic products less competitive in international markets, leading to increased imports and a wider trade deficit.
Policy-Related Factors:
- Trade Barriers: Imposing tariffs or other restrictions on exports can make it more difficult for domestic producers to sell their goods abroad, while reducing the cost of imports, leading to a trade deficit.
- Subsidies and Tax Incentives: Government subsidies or tax incentives for import-related industries can make imports more attractive than domestically produced goods, widening the trade deficit.
- Investment Policies: Policies that favor foreign investment over domestic production can encourage companies to move production overseas, leading to increased imports and a trade deficit.
India’s performance on export front
- On the export front, the increase in October should be seen as a welcome development given the rather anaemic performance of the country in this sector in the recent past.
- For instance, October is only the second month when merchandise exports have grown in the current financial year that started in April.
- If one takes the calendar year, October is just the third month when exports have risen.
- Leading the pack in terms of growth rate were drug and pharma exports, which grew by over 29 per cent in October to $2.42 billion.
- Electronic goods, engineering goods and agricultural items also did well. But beyond the growth rate relative to October 2022, the picture changes somewhat.
- The fact is that in October 2021, India’s exports stood at $35.7 billion.
- That India’s exports in October are roughly 6 per cent below what they were two years ago puts this latest increase in perspective.
Performance on import front
- On the import front, the story is slightly different.
- Even though import growth has also been negative for India for the most recent months, yet in absolute terms, they have continued to grow from October 2021 ($53.6 billion) to 2022 ($57.9 billion) to $65 billion now.
The overall trend in external trade
- While both exports and import growth rates have either been negative or muted, October saw a massive divergence between the two trend lines.
- As a result, India’s trade deficit at a monthly level has grown to $31.5 billion in October — a record high.
- A big culprit has been the near doubling of gold imports in October — from $3.7 billion to $7.2 billion.
Conclusion: The trade deficit depreciates the rupee. This depreciation exacerbates the trade deficit, as more rupees are needed to purchase the same amount of imports in the future. Therefore, close attention and appropriate measures are essential to manage trade deficits and maintain economic stability.