India has grappled with tragedies related to alcohol including hooch mishaps. While such tragedies also happen elsewhere in the world, the frequency of such events in India is definitely way above the rest of the world. Banning alcohol is not the solution as one has seen in Bihar where hooch tragedies have jumped after prohibition. A more pragmatic solution therefore lies somewhere else.
WHO estimates that 25.5 per cent of global alcohol is "unrecorded" (illicit + legal homebrew and community alcohol). Some of it is what local communities and tribals have made for generations and while the product quality may be open to debate, there has been no health scare there. The bulk (81per cent) of the global illicit market is actually distilled alcohol, also called spirits or liquor. This is a serious public health, social, and financial problem.
The reason is simple, distilled spirits are easy to make even in the backyard, unlike products like beer which need large investment and expertise. So, in a society where spirits are the dominant form of alcohol, like India is, the fear of alcohol-related tragedies is always around the corner.
The answer therefore lies in shifting consumers to milder forms of alcoholic drinks like beer and wine, which has become a norm in the West. This is also what the WHO suggests — "the most effective approach to taxation with a view to improving public health and reducing this harm is to tax the volume of alcohol through a specific system of taxation. Such a system may be most effective at improving health if it has higher rates of taxation for stronger products."
Beer, a low alcohol product, accounts for 68per cent of all alcoholic beverages consumed globally. But in India, it accounts for just about 35per cent, and a whopping 64per cent is the distilled spirits or the "hard liquor". It is pure economics that drives this 'bang for buck' behaviour by consumers in India, making them consume maximum amount of alcohol at the minimum possible cost. And this is delivered by "hard liquor". A product with 43 per cent alcohol priced is more attractive than a similar priced product with 5-7 per cent alcohol.
The humble 180 ml bottle called "pauwa" (nips), priced Rs 140 on an average and with 42.8per cent alcohol content delivers 77 ml of pure alcohol at a cost of Rs 1.8 per ml. On the other hand, the milder and less damaging beer delivers half the alcohol at twice the price. A 650 ml beer bottle, with an average 7 per cent
alcohol content, and priced at Rs 160 on an average delivers 45 ml of alcohol at Rs 3.6 per ml, twice the price as compared to hard liquor. Mind you, we are not talking about the country liquor ("desi daru") which, considering its price is not even worth comparing.
This is exactly what the WHO warns against, “Such a system may be most effective at improving health if it has higher rates of taxation for stronger products for two reasons: first, drinkers can consume a greater volume of alcohol more quickly through stronger products, and such products may therefore be more closely associated with heavy episodic drinking and intoxication and second, production and distribution costs may be lower, at least in some cases, for stronger products, meaning that the same volume of alcohol can be sold more cheaply in higher ABV products even at the same rate of specific duty."
Primary reason behind this pricing anomaly which makes liquor more attractive is the fact that unlike in most part of the world, in India the excise policies that do not differentiate between a hard liquor and the milder versions like beer or wine. All alcoholic beverages are often taxed at similar rates irrespective of the amount of alcohol they contain.
This defies logic. Alcohol and water are added in different proportions to make an alcoholic beverage. Around 95 per cent of the beer in a bottle contains water. Taxing it same as liquor which has just 50-55 per cent water is wrong, because doing means that the consumer is being made to pay tax on the high water content in beer, thus being penalised for drinking a product with less alcohol.
Taxation based on alcohol strength is the best way to improve public health outcomes. Another WHO study conducted in Europe revealed that policies shifting consumption away from high-strength alcohol beverages toward lower-alcohol beverages were associated with improving multiple public health indicators. While any beverage containing alcohol can be abused, independent research supports a conclusion that beverages with a low concentration of alcohol, like beer, are less tied to population health risks like alcohol poisoning.
Many developed countries, particularly in Europe, now recalibrate their tax structures and policy initiatives in favour of milder alcoholic beverages. In 2023 the UK rationalised its tax structure for alcohol which is based on ABV content of alcoholic beverages. So, higher the actual alcohol content, higher the tax.
Similarly, the majority of OECD countries now have a tax structure which is based on actual alcohol content a beverage has. Studies show that it has helped in reducing consumption of actual alcohol and alcohol related harms in these nations. Experts are now calling for this practice to be implemented more consistently across countries.
It is high time that the state governments in India also go in for a policy overhaul in favour of milder versions of alcoholic beverages. Taxation on an alcoholic beverage needs to be linked directly with the amount of alcohol it contains.
Also, beer and wine licenses need to be liberalised so that consumers prefer beer and wine over "hard liquor". Unless the state governments and our policymakers realise this, it is impossible to meet the target set by the WHO to reduce alcohol consumption by 10 per cent in 2030 over 2010. To do so we need to shift from "hard liquor" to beer and wine.
