WHAT IS HAPPENING TO THE TRAVEL AND TOURISM SECTOR IN INDIA?
Ongoing consecutive “waves” of the Covid-19 pandemic and the subsequent lockdowns in countries across the world have had an impact on almost every global industry. While no industry, business (big or small), and/or individual has completely escaped the financial impact of the pandemic, some industries have been impacted much more than others. Undoubtedly, one of the most widely affected industries worldwide has been the tourism industry. Tourism is the third-largest export sector in the world, accounting for 7% of global trade (2019). For some countries, tourism accounts for over 20% of overall GDP and is the source of direct and indirect employment for millions.
In November 2020, the World Travel & Tourism Council (WTTC) said that by the end of 2020, 174 million people worldwide could lose their jobs if the restrictions on travel continued. Actual figures revealed that 62 million jobs were lost in 2020 and figures published by the World Tourism Organization (UNWTO) revealed that roughly $1.3 trillion was lost in export revenue in 2020. Tourism is an extremely labour-intensive industry and provides scope of employment for low-skilled workers. While some countries in the world have begun to lift restrictions on foreign and domestic tourist arrivals, India is experiencing a deadly second wave of the Covid-19 crisis and has closed its doors to domestic and international tourists. The travel and tourism industry in the country, accounting for roughly 9% of its GDP (WTTC, 2018), has experienced a sharp decline as tourist footfalls have taken a hit across the country. Most states in India continue to be under lockdown, and even as curbs on movements begin to be lifted, the tourism industry is unlikely to witness an immediate recovery.
Before the Covid-19 pandemic hit India, the tourism and hospitality industry in the country was operating at an all-time high. Travel and tourism is the largest service industry in India and was estimated to be worth $247.37 billion in 2018 as per WTTC data. The industry was the largest Foreign Exchange Earner, with earnings of $29.962 billion in 2019 (y-o-y growth rate of 4.8%). For the same year, the sector contributed nearly $194 billion, around 6.8%, of GDP. In addition to this, the tourism industry accounts for 8% of employment in the country, employing around 39 million people (2018-19). In fact, the government made the industry a major pillar in its “Make in India” program due to its potential for creating jobs. The threat of job losses persists as many jobs are currently supported by government retention schemes and reduced hours, which could be lost without the full recovery of travel and tourism.
With borders closed to foreign and in some cases, even domestic tourists, and the complete shutting down of public places, including hotels and restaurants, the industry fueling the Indian economy in so many ways came to a crashing halt. During the budget session this year, the Minister of State for Tourism said that the total number of tourists arriving in India went from 77.5 lakh during April-December 2019 to 2.13 lakh for the same period in 2020. Foreign tourist arrivals during April-December 2020 registered a decline of 97% as compared to the same period in 2019. Apart from direct revenue generated by foreign tourists and the complete halt of the hospitality sector, domestic and international medical tourism, the MICE (meetings, incentives, conferencing, exhibitions) sector, and MSME output in the tourism sector have all been adversely affected.
In August 2020, Tourism Secretary Yogendra Tripathi said that roughly 2 to 5.5 crore people employed in the tourism sector, directly or indirectly, have lost their jobs in 2020, while the revenue loss in the sector was estimated at INR 1.58 lakh crore. This figure is likely to be much higher in 2021, after the impact of the second wave. The rollout of vaccines in January this year had revived the possibility of increasing domestic tourism, giving those in the industry hopes of a “normal” summer, which is considered to be the peak time of operations for the industry. However, the ravaging impact of the second wave, which swept across the country at a faster speed than the first, took away any chances of a revival. For many in the domestic tourism and hospitality industry, who had hoped to recover losses in 2021 as restrictions were being relaxed, the impact of the second wave and losses could mean final blows to their businesses.
Covid-19 has changed the way people, businesses and countries are approaching tourism with the impact on the industry across the world being unprecedented.
Photograph by Wikimedia Commons
TOURISM-RELIANT STATES: COPING MECHANISMS
As per data provided by the Ministry of Tourism, the top tourist destinations in India are Tamil Nadu, Kerala, Goa, Uttar Pradesh, Rajasthan, Bihar, and West Bengal, with tourism accounting for as much as 20% of the GDP in some of these states. The tourism industry in Goa, which contributes around 17% of the state’s GDP suffered losses of around Rs 2,000-7,200 crores and job losses of around 35-58% during the first wave of the pandemic. The local economy of the state, encompassing small hotels, guest houses, shacks, restaurant owners and employees, taxi drivers, independent guides, and freelancers, directly employs 35% of the state’s population.
Similarly, in Kerala, the tourism industry contributes to around 10% of the state’s GDP. The sector, which had only just started recovering from the impact of the 2018 floods and the Nipah virus scare, collapsed completely due to the impact of the Covid-19 lockdowns and travel restrictions. Estimated losses from domestic tourism are around Rs 19,697 crore, and approximately Rs 5,274 crore from loss of foreign tourism. Bihar, which is home to the UNESCO world heritage sites of the Mahabodhi temple in Bodh Gaya and ruins of the ancient Nalanda University, witnessed a major decline in the number of foreign as well as domestic tourists. The state of Rajasthan, which is also heavily reliant on tourism, witnessed a 60% drop in the arrival of foreign tourists and 70% drop in domestic tourists, resulting in a deep impact on the domestic economy.
WHAT IS THE GOVERNMENT DOING TO HELP?
In April 2020, the Ministry of Tourism constituted a National Tourism Taskforce, to be headed by the Minister of State for Tourism to meet the challenges posed by Covid-19. The task force consisted of state tourism ministers, joint secretary-level officers as well as heads of tourism and hospitality associations.
Tourism-reliant states have also announced various measures to help their own local economies bear the brunt of the Covid-19 pandemic. In Jammu and Kashmir, an Rs 1,350 crore economic package was announced to help various sectors impacted by the pandemic. This included a financial assistance package for shikara owners, tourist guides, pony walas, and those who rent palanquins to tourists.
The Rajasthan government also announced an investment of Rs 500 crore to the Tourism Development Fund along with relief under the Rajasthan Investment Promotion Scheme 2019 for one extra year to establishments in the tourism, multiplex, and hotel sectors.
The Delhi government has allocated Rs 521 crore in the 2021-22 budget for the implementation of schemes, programmes, and projects in the tourism, ar, and culture sectors and introduced ‘Delhi Heritage Promotion’ and ‘Delhi Tourism Circuit’ to help revive the sector post-pandemic.
Despite these measures, it is unclear whether the tourism sector will be able to survive the impact of the second wave of Covid-19. Travel agents, hotel and restaurant owners, employees, local artisans, travel guides, among others, were all relying on a glimmer of hope for the tourism sector after the first wave.
The crushing impact of the second wave and the closing down of borders has quashed all hopes of a faster and earlier recovery.
As India continues to deal with the impact of the second wave, the tourism industry, unlike other industries which would begin recovery immediately after restrictions are lifted, is unlikely to bounce back as fast as hoped.
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LAKHIMPUR VIOLENCE IMPACT ON BJP IMAGE IN UP
On 3 October 2021, the visuals of a convoy of vehicles running over protesting farmers in the Lakhimpur Kheri district of Uttar Pradesh were plastered over mobile phones and television screens. Eight people, including four farmers, died in the ensuing violence which was intended to be a protest to block UP deputy chief minister Keshav Prasad Maurya’s visit to Banbirpur village. The protest was part of the farmers’ agitation that has been going on in several areas of the country for over a year, with farmers from different states unhappy with the three new farm laws passed by the Central government. Shortly after the incident, more protests by farmers’ organizations and opposition parties erupted across the country, demanding the arrest of Ashish Mishra, the son of Union Minister of State Ajay Mishra, who was allegedly driving the car involved in the incident. Police arrested Ashish Mishra on 9 October.
POTENTIAL FALLOUT AS A RESULT OF LAKHIMPUR VIOLENCE
The arrest of Mishra, and two other accused, has not silenced opposition parties and farmer groups. The delay in arresting the accused and overall investigation by the Uttar Pradesh government has been criticized by the Supreme Court and the general public. The Yogi Adityanath-led Bharatiya Janata Party (BJP) government, which is already facing a lot of backlash from farmer communities, is in hot water due to the involvement of Mishra’s son, who used to be an office-bearer in the BJP’s Lakhimpur Kheri unit. The ripples of the incident are likely to be felt in the upcoming Assembly polls in the state, as opposition parties are unlikely to brush it under the carpet.
The ramifications of the violence in Lakhimpur Kheri are likely to be paramount for the government in UP. The district is one of the largest in the Terai region of UP and has eight Assembly segments, all of which were won by the BJP in the 2017 Assembly elections. In 2012, the party had only won one seat out of eight in the region. The party had managed to significantly increase its vote share across all the eight assembly segments in the region in 2017, securing a vote share increase of roughly 40% in Palia AC, 45% in Gola Gorakarannath AC, 30% in Dhaurahra AC and 38% in Kasta AC. Dominant communities in the region include Sikhs, Brahmins, Kurmis and Muslims.
The agitation in UP had been confined to western UP to a large extent. The farm unions’ mobilization in UP is concentrated in western UP as sugarcane farmers in the region are unionized. In other farming dominant areas of UP, including Bundelkhand, Awadh, and eastern UP, farmers are not unionized to the same extent. With the Lakhimpur incident, the farmers’ agitation has penetrated deeper into Central UP and could have spillover effects in adjoining districts such as Pilibhit, Shahjahanpur, Hardoi, Sitapur, and Bahraich, where the party had recorded major victories in the 2017 elections by winning 37 seats of the 42 across the six districts.
Another important political ramification of the fallout is going to be the spotlight on MoS Ajay Mishra, who is a Member of Parliament (MP) from Kheri, and is considered a prime Brahmin face for the BJP in the state. Mishra, along with Jitin Prasada, was inducted into the Union Council of Ministers in July this year, in an attempt to reach out to the Brahmin community in the state. Brahmins have traditionally been strong supporters of the BJP – but lately, they have reportedly been expressing discontent with the Yogi Adityanath administration. Brahmin leaders have expressed feeling an “anti-Brahmin” sentiment amongst the ranks of BJP leaders, who they allege have been giving preferential treatment to Other Backward Classes (OBCs) and Dalits at the cost of the Brahmin community. Brahmins in the state are angry at what they see as atrocities against them going unpunished in the Vikas Dubey encounter case and murder of journalist Vikram Joshi. This brewing discontentment among Brahmin groups is unlikely to completely shift the vote bank to opposition parties, but it could, however, impact the electoral prospects of the BJP in the state.
FARMERS AND THE BJP: A LONG STRAINED RELATIONSHIP
Over the past year, tens of thousands of farmers from the country have camped on major highways at the borders of the national capital region of Delhi to oppose the farm laws, in India’s longest-running farmers’ protest against the government. Farmers have been protesting against the three agricultural acts passed by the Indian Parliament, which would allow them to sell produce at places other than Agricultural Produce Market Committee
(APMC)-regulated mandis, enter into contract farming, and stock food articles freely. Protesting farmers believe the move towards greater privatisation in food markets is a ploy by the government to relinquish its responsibility of being the guarantor of minimum support prices (MSPs). MSPs work in the formally regulated APMC mandis, and not in private deals. Traditional farmers are afraid of the entrance of “big companies” into farming markets and feel the new laws will leave them vulnerable to corporate exploitation.
In November 2020, farmers’ groups led by the Bharatiya Kisan Union (BKU) held sit-in protests across several districts of western Uttar Pradesh, blocking highways in support of the farmers of Haryana and Punjab, who marched towards New Delhi. Most of the farmers’ protests had so far been in western UP, which is the major agricultural belt of the state. Similarly, other western UP districts including Baghpat, Muzaffarnagar, Meerut, Bijnor, Hapur, Shamli, Bulandshahr, Ghaziabad, Noida, Moradabad, and Saharanpur also witnessed sit-in protests by the farmers. In September 2021, more than 5,00,000 UP farmers gathered in Muzaffarnagar to form the biggest rally against the BJP-led central government demanding the repeal of the three farm laws.
The political scenario in western UP has dramatically turned against the BJP since the farmers’ protests erupted – leaders of farmers’ organizations such as the Samyukta Kisan Morcha (SKM), BKU (Bharatiya Kisan Union), and AIKS (All India Kisan Sabha) have collectively maintained that the BJP regime is “anti-farmer” for bringing in the three contentious farm laws. The Jat community in UP, dominant in the western part of the state, had shifted allegiance to the BJP in the past few elections. However, many have now turned against the party because they believe that the BJP is not willing to take back the farm acts which they have been protesting against for the past several months. The opposition parties, including the Indian National Congress and Rashtriya Lok Dal (RLD), have adopted the strategy of attempting to win over the aggrieved farmers’ votes by consolidating their anger against the ruling BJP. They have organized a series of mahapanchayats, to continue to brew the simmering discontent against the BJP. The only major opposition party in UP which has not been vocal about the farmers’ protests is the Bahujan Samaj Party (BSP).
While the INC has been organizing mahapanchyats and protests against the BJP government, political analysts state that due to the lack of prominent faces in the state, the efforts by the Congress will not necessarily convert into votes and that the Samajwadi Party (SP) and RLD are likely to be the biggest beneficiaries of the anger towards BJP. SP leader Akhilesh Yadav has explicitly supported the farmers’ protests and called for the three acts to be repealed. He has also announced the repeal of the three farm laws as one of the key campaign promises for farmers for the upcoming Assembly polls. The RLD, with the active participation of former MP Jayant Choudhury, has also seen a resurgence in the state since the farmers’ agitation began. According to political analysts, the coming together of Akhilesh Yadav and Jayant Chaudhary could impact the political fortunes of the BJP in the state.
This is not the first time that farmers in Uttar Pradesh are expressing their anger against the BJP ahead of an election. In 2016, they had shown ire towards the party because of demonetisation and its harmful impact on the agricultural economy. Additionally, the farmers in UP were also upset with the government in the run-up to the 2017 assembly polls and before the 2019 Lok Sabha election, in the face of a declining economy and subsequent rise in farmers’ suicides, as well as the issue of non-payment of dues by sugar mills.
In the last few months, apart from the dissatisfaction against the three farm laws, farmers in UP have also complained about the rising prices of electricity, raw materials, and low minimum support prices compared to the cost of production. In an attempt to win farmers back, the BJP-led government has announced various Centre and state-sponsored welfare schemes and organized a huge farmer outreach programme, visiting 140 assembly segments in the state to hear the issues of the farmers.
Contributing reports by Damini Mehta, Junior Research Associate at Polstrat and Animesh Gadre, Damayanti Niyogi, Kavya Sharma, Interns at Polstrat.
WILL INDIA’S DECISION TO RESUME COVID-19 VACCINE EXPORTS IMPACT DOMESTIC SUPPLY?
Last month, Union Health Minister Mansukh Mandaviya announced that India would be resuming COVID-19 vaccine exports, under Vaccine Maitri – in the fourth quarter of this year – in order to fulfil its responsibility to COVAX. The COVAX programme is a vaccine alliance led by the Global Alliance for Vaccines and Immunisation (GAVI), the World Health Organisation (WHO), and the Coalition for Epidemic Preparedness Innovations (CEPI) in partnership with UNICEF, vaccine manufacturers and the World Bank, among others. COVAX coordinates international resources that seek to enable low-to-middle income countries equitable access to COVID-19 vaccines, tests, and therapies. When the Indian vaccination programme rollout started in January 2021, India began to export vaccines as part of the Vaccine Maitri scheme. Around 6.6 crore doses were either sold or donated before the export ban came into place in mid-April in light of a devastating second wave of COVID-19. However, in the months following the second wave, both the domestic production and speed of vaccination increased considerably. More than half of India’s eligible population – some 59.4 crore people – have received at least one dose of a COVID-19 vaccine as of September 2021. Following this, the government has decided to resume exports of the vaccine. Although the rate of vaccination in the country has increased, the pace of vaccination as per health experts needs to be increased further to enable the government to reach its goal of vaccinating all eligible adults by the end of December this year.
WHAT IS THE COVAX PROGRAMME?
The COVAX programme aims to vaccinate nearly 20% of the population in advanced market commitment countries, that is low-to-middle income countries that cannot afford to pay for the COVID-19 vaccines. These countries include those with a Gross National Income per capita of less than USD 4,000, along with some other countries which are eligible under the World Bank International Development Association. The funding target of the programme is USD 6.8 billion. This funding is mostly coming from high- and middle-income countries which will also receive a share of the vaccines produced for COVAX.
Ghana was the first country to receive vaccines under the programme in February 2021. Since then, more than 30.3 crore doses have been shipped to 142 countries around the world, including Bangladesh, Brazil, Ethiopia, and Fiji. COVAX has segregated its distribution in order of prioritisation. The first stage of the rollout will go to healthcare and social care workers. The second stage will target individuals over 65 years and those who are at “high risk”. Lastly, the final stage of the rollout includes further priority groups. No country will receive vaccines for more than 20% of their population before others in the COVAX financing group.
WHY IS INDIA RESUMING EXPORT OF THE VACCINES NOW?
The central government has been working to create a stockpile of vaccines for India in case of a third wave of COVID-19. As of September 2021, Indian companies have set up the capacity to produce nearly 300 crore COVID-19 vaccine doses a year. Currently, the Serum Institute of India (SII) is producing around 16 crore doses of Covishield (Astra-Zeneca) a month and has indicated it will make 22 crore doses of Covishield from October. Zydus Cadila’s vaccine is also expected to provide 1 crore doses a month of ZyCoV-D in the October quarter. Additionally, SII’s Covovax (Novavax) vaccine is also expected to be produced in the October quarter. India is aiming as well to produce more than 30 crore doses of Sputnik a year, although when that target might be achieved is not clear. Only surplus vaccine doses will be exported and the vaccination of Indian citizens will remain the priority of the Indian government. Other factors that have prompted the decision to resume exports include a steady decline in new cases, over half of eligible adults receiving at least one dose of the vaccine, and a small percentage of breakthrough infections.
DOMESTIC PRODUCTION STATUS
The two locally-made vaccines – Covishield and COVAXIN – are the mainstay of the country’s vaccine programme. The SII makes Covishield (under licence from AstraZeneca), whilst Bharat Biotech produces the locally-developed COVAXIN. The Department of Biotechnology under the Ministry of Science and Technology has launched ‘Mission COVID Suraksha Programme – the Indian COVID-19 Vaccine Development Mission’ last year. Under the Mission, facility augmentation of Bharat Biotech and one state public sector enterprise and two central public sector enterprises (PSEs) have been supported for the production of vaccines. The government has also extended financial assistance to one of the domestic manufacturers for ‘at-risk manufacturing’, and made advance payments against the supply orders placed with SII and Bharat Biotech. Additionally, streamlining of regulatory norms for approval of vaccines is in progress.
The initial manufacturing projection that Serum Institute of India had submitted to the government for the month of August was 12 crore vaccines. Bharat Biotech was expected to produce another 2-2.5 crore vaccine doses of COVAXIN in August. Officials said the August supply of COVAXIN has been about 2 crore doses but the Covishield supply was better than expected. From January 16 to August 5, 44.42 crore doses of Covishield and 6.82 crore doses of COVAXIN were supplied for the National COVID-19 Vaccination Programme. The government has previously said it has placed orders for the supply of 100.6 crore doses up to December 2021. “Between August to December 2021, 135 crore doses are expected to be available,” the government said.
WILL EXPORTS AFFECT DOMESTIC VACCINATION SUPPLY AND SPEED?
India’s total vaccine production has more than doubled since April and is set to quadruple to over 30 crore doses in October as per information provided by the Health Ministry. During the first few months of the vaccination drive, the rate of vaccination had a declining trend, coinciding with a drop in rates of infection. During the devastating second wave that followed, shortages of the availability of the vaccine were reported from all parts of the country, with many states temporarily suspending the vaccination programme several times. However, since then, a combination of factors including an increase in the supply of COVID-19 vaccinations, reduction in vaccine hesitancy due to the impact of the second wave, and an overall push for vaccination by health authorities has increased the pace of vaccination significantly in the country. One of the key reasons for the increase in the production of vaccines has been the introduction of a simpler licensing process.
An important point to note is that regional and gender disparities in India’s vaccination drive also persist with larger and poorer states lagging behind smaller and richer ones. Experts have said record-breaking days are encouraging but vaccination rates need to rise consistently. With nearly 100 crore doses needed to fully vaccinate all adults, experts say it is unlikely that everyone will be fully vaccinated by the end of the year. For that, one crore doses need to be administered every day. At the moment, according to the latest statistics, India’s average daily pace is about 70 lakh doses. The government needs to maintain a delicate balance between fulfilling its obligations to the COVAX programme while ensuring domestic supply and distribution of the vaccine is not affected in the next few months to successfully reach its goal of vaccinating all eligible adults.
As part of its Vaccine Maitri programme, before the export ban, India had exported and donated more than 6.6 crore doses of COVID-19 vaccines to 95 countries worldwide. However, out of this, only 2 crore doses were a part of the global COVAX facility. It is important to note that there is a distinction between donations of vaccines and the commercial obligations of vaccine manufacturers to export vaccines. Out of the 6.6 crore doses exported, 3.6 crores were commercial exports. The remainder of the exports were donated as aid to UN Peacekeeping forces and to neighbouring countries.
The programme aims to vaccinate nearly 20% of the population in Advance Market Commitment countries, i.e. low-to-middle income countries
Source: Wikimedia Commons
AAP’S DELHI MODEL: WILL THE FREEBIE PLOY WORK IN 2022?
Since 2017, the Aam Aadmi Party (AAP) has been contesting Assembly elections in at least 14 states outside Delhi but has failed to win even a single seat in 13 states. The only state where the AAP saw some victory was in Punjab in 2017, where it won 20 seats and is currently the main opposition party. However, after its victory in the 2020 Delhi Assembly elections, where it had a phenomenal performance and retained 62 out of the 70 seats, the party has now fuelled its spread across other states. In January 2021, Arvind Kejriwal confirmed that AAP will contest in six state elections in 2022 – Uttar Pradesh, Himachal Pradesh, Goa, Gujarat, Uttarakhand, and Punjab. Elections in Uttar Pradesh, Goa, Uttarakhand, and Punjab are scheduled to take place early next year, and the AAP has been vigorously campaigning in all four states. The party, which has been pedalling its “Delhi Model” of governance, including free provision of water and electricity (up to a fixed number of units) and improved health and education infrastructure, has made very similar promises in the four states. While the freebie promises have captured voter interest in Punjab and Goa, it is yet to be seen whether the model will work in Uttar Pradesh and Uttarakhand.
AAP does not have a credible face from Punjab with 21.6% of the respondents saying that Delhi Chief Minister Arvind Kejriwal is their preferred choice to be the next chief minister.
PROMISES TO PUNJAB: ‘DELHI MODEL’ AND FREEBIES
With the infighting in the ruling Congress alliance and the sudden change of guard in the state, all eyes have been on the AAP in Punjab. The AAP emerged as the second-largest party in the 2017 assembly election, which was its first in Punjab, and won 20 of the 112 seats it contested (the assembly has 117 seats). The party managed to secure a vote share of 23.7% while the winning INC had a vote share of 38.5%.
The biggest kickstart to the 2022 election campaign from the AAP came in March 2021, when Arvind Kejriwal held a Maha Kisan Panchayat in Moga in Punjab and promised that the party would stand shoulder-to-shoulder with farmers protesting against the contentious agriculture laws. The Punjab government has regularly been under pressure regarding the issue of poor electricity supply, especially from farmer groups. Emphasising the gravity of the situation, Kejriwal announced that the party would provide 300 units of free electricity per month per household in Punjab if they came to power in the state. The Congress made a similar promise in 2017 – however, this is yet to be implemented. The AAP has criticized the INC government, stating that the party has not fulfilled any of its promises in the state, including debt waiver for farmers, jobs, providing smartphones, and unemployment allowance. Kejriwal has also highlighted the issue of youth unemployment in the state and has promised that if voted to power, jobs will be given to those who have employment cards issued by the INC government.
AAP’s poll strategy in 2022 is very similar to its 2017 strategy. Experts state that the battle for Punjab is likely to be a two-front contest between the INC and AAP. As per the ABP-CVoter-IANS opinion poll, AAP is likely to emerge as the single largest party in the 2022 polls. However, the survey also reveals that the AAP does not have a credible face from Punjab – someone who can be projected to be chief minister. While 21.6% of the respondents said that Delhi Chief Minister Arvind Kejriwal is their preferred choice to be the next chief minister of the state, only 16.1% consider Bhagwant Mann, AAP’s face in Punjab as the preferred choice for the top job in the state.
Source: Wikimedia Commons
FIRST U.P. ELECTION: WILL AAP HAVE ANY IMPACT?
The AAP, which did not contest the 2017 Assembly elections in Uttar Pradesh, or the 2019 Lok Sabha elections, announced on 31 August 2021, that it will field candidates for all 403 seats in the Uttar Pradesh Assembly in the 2022 election. Rajya Sabha MP Sanjay Singh announced that the AAP’s Tiranga Sankalp Yatra will be taken out in all constituencies of the state and urged party workers to be involved in the preparations for the elections at the booth level in order to fight the imminent polls with full force. The party conducted the ‘Tiranga Yatra’ in Ayodhya this month led by Delhi Deputy Chief Minister Manish Sisodia and Sanjay Singh. Similar to promises made in Punjab, Uttarakhand, and Goa, the AAP has also promised to provide 300 units of free electricity to domestic consumers, waive pending “inflated” bills and ensure a 24-hour power supply in Uttar Pradesh. Earlier last week, the party released a list of 100 potential candidates who have been put in charge of 100 Assembly segments. However, the party has yet to announce a Chief Ministerial face or candidate. Given the high stakes of the battle between the incumbent BJP and other influential parties in the state, including the Samajwadi Party (SP), Bahujan Samaj Party (BSP),and the INC-led UPA, to combine, it seems unlikely that the AAP’s freebie promises will attract voters in the state.
AAP VS BJP IN GOA
In the last elections in Goa in 2017, the AAP made an ambitious debut campaign and pitched 39 candidates. However, the party failed to secure a single seat and was able to secure 6.3% of the vote share. Even AAP’s chief ministerial candidate, Elvis Gomes, a former bureaucrat, trailed at fourth place in his constituency in Cuncolim. However, things are looking up for the AAP in Goa in 2022 as experts predict the party will make big gains in the state and replace the INC as the principal opposition party. The BJP, which formed the government in 2017 with the Maharashtrawadi Gomantak Party (MAG), Goa Forward Party (GFP), and Nationalist Congress Party (NCP) is expected to retain power in the state. The ABP-CVoter survey has predicted 22-26 out of the 40 seats for the BJP, followed by 4-8 seats for the AAP.
The AAP startedits election campaign in Goa with Arvind Kejriwal announcing that 300 units of free electricity per month would be given to each family in Goa, if the AAP comes to power and consumption of electricity above 300 units would be charged at 50%. The party has promised the farmers of the state that free electricity would be provided for agricultural purposes if AAP forms government in the coastal areas. Kejriwal stressed the fact that these are not promises made only for the election, but actual plans that will be implemented. The AAP also announced its seven employment guarantee promises in September 2021. These include the provision of an unemployment allowance for some sectors, reservation of jobs in the private sector for Goans, formation of a skill-building university, and allowance for those in industries such as tourism which have been gravely affected by the pandemic. The AAP’s preparations for the 2022 assembly elections received a boost in Pernem, Saligao, and Porvorim constituencies, with a few BJP and Congress workers joining the party in June 2021. It is interesting to note that last month, Goa Chief Minister Pramond Sawant also announced a ‘Save Water to Get Free Water’ scheme whereby households in the state will not be charged for consumption up to 16,000 litres. AAP responded to the announcement by stating it was a “true victory” for the party that its opponents were “copying” its policies.
FREEBIE MODEL UNLIKELY TO WORK IN UTTARAKHAND?
Till 2020, AAP had contested Assembly elections in at least 14 States outside Delhi, but failed to win even a single seat in 13 of them.
The AAP last contested the hill state last in 2014, during the Lok Sabha elections, fielding candidates in all five constituencies, but failing to win any seats. Following this, the party didn’t contest the 2017 Assembly polls in Uttarakhand, where the BJP won in a landslide victory. However, the party has already swung into action for the 2022 polls but is not following the traditional booth-level electoral campaigns or addressing rallies to attract voters.
The party has hired nearly 200 vehicles carrying photographs of Arvind Kejriwal which have been doing the rounds in the hills while canopy booths have been set up to detail what the party has to offer in state elections. As of August 2021, 70 vehicles fitted with LED screens were sent off to every Uttarakhand constituency streaming videos of the Kejriwal government’s performance in Delhi. The party has been attacking the incumbent BJP government for poor health services and rising unemployment in the state. They announced that if elected to power, AAP will ensure employment in every household of the state (Har Ghar Rozgar) and provide a Rs 5,000 monthly stipend to unemployed youth. In July 2020, on a state visit to Uttarakhand, Kejriwal promised that up to 300 units of free electricity per month would be given to every family in Uttarakhand and free electricity would be given to the farmers of the state. However, apart from its freebie promises and Delhi model of governance, the party has also promised that it would scrap the Char Dham Devasthanam Board (CDDB). The CDDB, which was constituted in 2019 by the then Chief Minister Trivendra Singh Rawat-led government, is strongly criticised by the priest community of the state. The party has also promised to make Uttarakhand the spiritual capital for Hindus across the world. However, as per a Team C-Voter and ABP News opinion poll conducted in September 2021, the BJP is likely to retain power in the state, winning about 44-48 seats, followed by the INC, which is likely to win 19-23 seats, while the AAP is likely to win 0-4 seats in the hill state.
Kejriwal-led AAP’s freebie ploy and “Delhi Model” of governance has helped the party establish a strong foothold in Delhi. Since the party entered the electoral competition in the Delhi Assembly Elections in 2013, it has become a dominant presence in the capital. In fact, during the 2020 elections in the city, riding on a wave of appreciation for its health and education facilities, as well as provision of free water, electricity, and bus transport for women, the party was able to secure 62 out of 70 seats in the capital. For the 2022 polls, the party’s campaign strategy continues to be the same across states – it is yet to be seen whether this formula will work anywhere else.
Contributing reports by Damini Mehta, Junior Research Associate at Polstrat and Animesh Gadre, Damayanti Niyogi, Kashish Babbar, Interns at Polstrat.
DECLINING FORTUNE OF THE CONGRESS: CAN IT RECOVER?
INDIA’S OLDEST PARTY: HISTORY OF FUNDING
All eyes have been on the Indian National Congress (INC) in Punjab this week, as Chief Minister Amarinder Singh handed in his resignation, stating the party’s upper management “humiliated” him, months before the electorally important state heads to the polls. While the INC’s disordered organizational structure in various states and a lack of proper leadership, amongst other factors, have been attributed to its declining presence across the country, another important issue that has come to light is its funding woes. The INC, which prides itself on being the country’s oldest party, once dominated the sphere of political donations and funding. Between 2004-2014, when the party was in power at the Centre, it was the most well-funded national party. However, since 2014, the Narendra Modi-led Bharatiya Janata Party (BJP) has overtaken it, receiving a whopping 400% more in political funding and donations. In 2010-11, the BJP received Rs. 14.62 crores in donations (Rs. 29.67 crores adjusted for inflation for 2021) and this figure increased to Rs. 785 crores for 2019-20 (Rs. 895 crores adjusted for inflation for 2021). On the other hand, in 2010-11, the INC received Rs. 8 crores (Rs. 16.27 crores adjusted for inflation for 2021) and this figure increased to Rs. 139 crores for 2019-20 (Rs. 158.36 crores adjusted for inflation for 2021). The INC’s income, as per income tax statements and audits, is at an 11-year low, and the rising costs of fighting elections without significant victories and running state offices have started to dent the reserves that the party has.
The history of the INC’s funding can be traced back to the Indian freedom movement, when the Birla family from Rajasthan was one of their leading donors. After Independence, those from the business class secured leverage over shaping the Congress government’s economic policy as they contributed to the majority of the donations towards poll spending. In the 1960s, the Congress and the Swatantra Party were the main beneficiaries of donations from big conglomerates such as the Tata Group and the Birla Group, who together accounted for 34% of the total political contributions from companies between 1962 and 1968. It wasn’t until 1969 that the Indira Gandhi-led government imposed a complete ban on corporate funding. This was done to break the nexus between politics and businesses but also to check the popularity of the centre-right Swatantra Party by drying up the supply of finances.
In an attempt to evade the ban, political parties started raising funds by publishing souvenirs, in which advertisements were placed by the business houses. Businesses also resorted to tax evasions, black-market operations, and other illegal mechanisms due to political compulsions and the threat of selective raids and nationalisation. This period also saw the rise of what is called “briefcase politics”, through which vast amounts of black money were transferred to the INC. However, the Rajiv Gandhi government, intending to end the culture of license permit raj, took the crucial decision of lifting the ban in 1985. The post-liberalisation period has witnessed a steady rise in the corporate funding of elections through both the traditional route of contributing directly to political parties and through other institutional innovations like electoral trusts.
Source: Creative Commons
2004-2014: CONGRESS AT THE CENTRE
In an attempt to bring “transparency” back in electoral funding, the Congress-led United Progressive Alliance (UPA) notified the Electoral Trust Scheme, which allowed the setting up of an electoral trust under Section 25 of the Companies Act, 1956. A total of nine registered electoral trusts donated a total of Rs 637.54 crore to political parties between 2004-2014 according to a report released by the Association of Democratic Reforms (ADR).
However, despite the ruling, the Congress, which was the ruling party at the Centre during this time, made around Rs. 4,000 crore – 83% of this funding came from unknown donors. Details of these patrons were not provided to the Election Commission or the income tax department. Most of the disclosed contribution came from trusts and groups of companies, amounting to roughly Rs. 70.28 crore. The mining, construction, and export and import sectors also contributed heavily to the party, donating around Rs. 23.07 crores. In 2014, Bharti Group’s Satya Electoral Trust donated the maximum amount – Rs 36.5 crore – to the Congress, followed by the A V Patil Foundation, which donated Rs. 5 crore, and Bharat Forge Ltd, who donated Rs. 2.50 crore to the party. After 2015, the Prudent Electoral Trust, earlier known as Satya Electoral Trust, and Samaj Electoral Trusts have become the two major trusts which fund the Congress.
According to the annual audit report submitted to ECI, Congress spent Rs 864 crore on elections in 2019-20, including Rs 406 crore on election publicity
POST-2014: A SHARP FISCAL DECLINE
The INC’s funding has been experiencing a sharp decline since it lost power at the centre in 2014. For the financial year 2017-18, the party declared its lowest income in 11 years, which was 12% lower than the year before. While the Congress party is ahead of other national parties in terms of total donations, it still earned less than one-fifth of what the BJP received in 2017-18. As per the income tax returns and annual audit reports, the Congress raised about Rs. 199 crore in donations for the year 2017-18, compared to Rs. 1,027 crore raised by the BJP. However, even before the Congress lost power in the centre, the BJP had surpassed the party in political donations. For the financial year 2013-14, the Congress raised Rs. 598 crores in political donations while the BJP collected Rs. 673 crore. The difference reduces when one goes back to 2012, when the Congress raised Rs. 356 crore, while the BJP raised Rs. 309 crores. However, in comparison, if we take a step back, the ruling Congress in 2006 raked up as much as 3.25 times more donations than the BJP. The Congress party’s fortune started sliding after it faced a flood of allegations of corruption and big-ticket scandals around 2012-13, which coincided with the rising stock of the once dormant BJP.
BJP’s rise in capturing more than 80% of the total donations and the Congress’ sharp deceleration is a result of being able to capture corporate donations. For instance, for the 2017-18 financial year, the BJP was able to secure 92% of total corporate donations. This is an ongoing trend, even while the Congress was in power. For 2005-12, the BJP raised Rs. 192 crore from businesses and corporations while the Congress raised Rs. 172 crore for the same period.
The Prudent Electoral Trust, one of the key contributors to the INC, donated Rs. 2 crore and Rs. 14 crore respectively during the years 2015-16 and 2016-17 to the Congress. The Samaj Electoral Trust, which counts the TVS Group and the Birlas among its donors, gave Rs 1.5 crore to Congress in the financial year 2016-17. During the 2017 Maharashtra Assembly Elections, Congress candidates from across the state said they weren’t being supported financially by the party, which was the reason for their failure in the bypolls. Similarly, 2018 proved to be an extraordinarily tough year fiscally for the Congress as the party fought a spate of state assembly elections including the electorally significant Rajasthan, Chhattisgarh, and Madhya Pradesh, which required considerable expenditure.
2022 ASSEMBLY POLLS: PRESSURE ON CONGRESS
As Congress continues to lose state after state, its funding crisis has worsened. To overcome the crisis, the Congress urged its members to step up as contributors, ran a crowdfunding campaign, and asked officials to cut expenses. Milan Vaishnav, a senior fellow for South Asia at the Carnegie Endowment for International Peace in Washington, also said that Congress is considered less friendly to big businesses as compared to the BJP, giving the BJP a fundraising advantage.
According to the latest contribution report for 2019-20 shared by the Congress with the Election Commission , Congress received approximately Rs.20 crore in donations from ITC Limited and its subsidiary companies between April 1 2019, and March 31 2020, making it one of the most prominent corporate donors to the party in the financial year 2019-20.
Electoral Trusts continue to remain Congress’s biggest donors. Prudent Electoral Trust and Jankalyan Electoral Trust contributed roughly Rs 30 crore and Rs 25 crore. For the same period, according to the annual audit report submitted to the Election Commission, the Congress spent Rs 864 crore on elections, including Rs 406 crore on election publicity and Rs 5.7 lakh on pre-poll surveys.
Financial support continues to be a key subject of discussion in the meetings held by the All India Congress Committee (AICC) with select state units. Lack of funding adversely impacts a party’s ability to campaign effectively. Congress candidates have increasingly been asked to curb their expenditure while campaigning.
This has also forced the party to give tickets to wealthy candidates, who can self-finance campaigns and also invest money in the party.
In the 2019 Lok Sabha elections, more than 83% of Congress candidates were millionaires. Analysts suggest that Congress could find itself in an even more dismal financial position if it fails to win the seven state elections coming in 2022 — Uttar Pradesh, Uttarakhand, Punjab, Goa, and Manipur — in February-March, and Himachal Pradesh and Gujarat towards the end of the year.
During the 2019 Lok Sabha elections, the party spent Rs 626.3 crore on general party propaganda and nearly Rs 193.9 crore on candidates.
With the rising costs of fighting elections and advertising, there is insurmountable pressure on the party to secure seats in the upcoming Assembly elections to ensure its survival.
Contributing reports by Damini Mehta, Junior Research Associate at Polstrat and Akansha Makker, Animesh Gadre, Damayanti Niyogi,Interns at Polstrat.
WILL THE NATIONAL FARMERS’ DATABASE REALLY DOUBLE FARMERS’ INCOMES?
Earlier in September, Agriculture Minister Narendra Singh Tomar announced the creation of a National Farmers’ Database containing the records of over 5.5 crore farmers. Tomar also announced that the number of farmers included in the database would increase to 8 crores by December 2021 by linking it with state-wise land record databases. This initiative is part of Agristack, a collection of technologies and digital databases on India’s farmers and the agricultural sector. These are being built by the central government to help farmers tackle issues such as poor access to credit and wastage in the agricultural supply chain, which continue to plague farmers across the country. The government has also created the India Digital Ecosystem of Agriculture (IDEA) which will lay down a framework for Agristack.
The Department of Agriculture & Farmers’ Welfare (DoAFW) claims that the digitized system will help offer proactive and personalised services to farmers, thereby increasing their income and improving the efficiency of the agricultural sector. However, experts have raised concerns about the digital divide between farmers, lack of push for crop diversification and representation of farmers in the India Digital Ecosystem of Agriculture (IDEA) task force, which could defeat the purpose of having such a database.
WHAT WILL BE THE USE OF A NATIONAL FARMERS’ DATABASE?
India has 14 crore operational farmland holdings and the maintenance of proper land records, especially in rural areas, has been a major challenge for the government in introducing and implementing welfare policies for farmers. The availability of a database consolidating these records would be an important stepping stone in the formulation of evidence-based policies for the agricultural sector. Under the programme, each farmer of the country will get what is being called an FID, or a Farmers’ ID, linked to land records to uniquely identify them. An important point to note is that the database would be linked to a digital land record management system, and so would only include farmers who are legal owners of agricultural land. Landless farmers will not be included in the database.
As part of the database, farmers would have access to personalised services, such as DBT, social and plant health advisories, and weather advisories. It would also aim to facilitate seamless credit and insurance, seeds, fertilizers, and pesticide-related information. The national database has been created by taking data from existing national schemes such as PM KISAN, soil health cards, and the insurance scheme PM Fasal Bima Yojna. The creation of the National Farmers’ Database will serve as the core of Agristack and IDEA, making data easily available and opening up the possibility of implementing digital technologies like AI/Machine Learning, Internet of Things (IoT) in the agricultural domain. The database would potentially contribute to ensuring input costs are reduced, ease of farming is ensured, quality is improved, and that farmers are able to get better prices for their farm produce, thus opening the sector up to productivity improvements.
CONCERNS ASSOCIATED WITH THE DATABASE AND IDEA
One of the glaring concerns of the database is the digital divide facing farmers in India. There is a huge digital divide between rural and urban areas in the country. According to the National Sample Survey conducted between 2017-2018, only 14.9% of rural households had access to the Internet against 42% of households in urban areas. The majority of farmers in the country live in rural areas and do not have access to smartphones, which means that they will not be able to enjoy the personalised purported benefits of the national database. Another concern of the database is that since it only includes farmers who are legally registered as landowners, it would leave out tenant farmers, landless labourers, and sharecroppers, who form a significant proportion of small and marginal farmers in the country. It would also exclude fisherfolk, livestock and dairy farmers without land, and those who collect forest produce. Various farmer groups have also pointed out that in most agricultural families, the land titles are typically in the name of the male head of the household. The Periodic Labour Force Survey (2017-18) in India states that in rural areas, 73.2% of the female workers are engaged in agriculture, but only 12.8% of women own landholdings, according to the Centre for Land Governance index.
Furthermore, farmers and farm organisations have raised objections to the IDEA task force, as there is a lack of farmer representation in the existing task force which was supposed to seek feedback from parties concerned. The farmers believe this process is similar to the way the three farm laws were introduced last year, with farmers not being consulted. A group of 91 farm unions and farmer organisations, including digital rights activists, have sent a feedback letter to the central government alleging that the current model is only focused on using pre-existing databases and would be geared towards corporate revenue models rather than ensuring that farmers’ needs and interests are considered. Agristack could also be misused for purposes such as predatory lending or land grabs.
WILL THE DATABASE DOUBLE INCOMES?
The initiative to build a national database is a part of a report prepared by the Committee on Doubling Farmers’ Income (DFI). Under Volume 13, the report proposes to build a dynamic database and ensure targeted and efficient delivery of support to farmers, and to assist specialised extension services. For the last year, farmers have been protesting against the three farm laws introduced by the central government at the borders of the national capital, which has triggered a lot of debate around problems in the agricultural sector in the country. The poor economic condition of farmers across the country is a huge part of the problem. A survey conducted by Lokniti in 2014 showed that around 40% of farmers were dissatisfied with their economic conditions. The figure was more than 60% in eastern India and more than 70% of farmers said they think city life was better than village life.
The lack of a coherent farm policy that addresses both the issues of sustainability and long term productivity growth in the sector has been brought up many times by farmers, farmer unions, and other stakeholders. Many agricultural scientists pointed out that crop productivity has reached a saturation point in many states, especially in the “food bowls” of Punjab, Haryana, and Western UP, where only rice and wheat crops have been grown for the past few decades due to governmental policies. While costs of agricultural inputs have increased year after year, farmers have only been receiving increases in the minimum support price (MSP) for the two crops. Furthermore, the pattern in the area sown is completely guided by the variation in the monsoon season as a bad monsoon directly impacts the cost of cultivation and makes sowing of large areas unprofitable for the farmers. Similar issues are also linked with the production and yield of the kharif crops, which are rain-fed.
While in theory, the creation of a national digital database would help deliver personalised services to farmers and allow for the implementation of technology to improve productivity in the sector, the database itself would leave out the most vulnerable farmers in the country. Pushing for greater crop diversification, correction of commercial risks due to volatile prices, and removal of restrictions on the movement of farm produce markets are some of the measures that perhaps could help, alongside the constitution of a national database to ensure the on-ground problems of farmers are resolved and thereby leading to higher incomes across the sector.
Contributing reports by Damini Mehta, Junior Research Associate at Polstrat and Akansha Makker, Animesh Gadre, Damayanti Niyogi,Interns at Polstrat.
YOGI’S MEAT AND LIQUOR BAN IN MATHURA: WHO WILL THIS AFFECT?
During the Krishnotsava programme in Lucknow on 30 August, Uttar Pradesh Chief Minister Yogi Adityanath announced a complete ban on the sale of liquor and meat in Mathura. The region around Mathura-Vrindavan, extending to Agra and Aligarh, is considered Krishnabhoomi (the land of Krishna) and is hence considered sacred to Hindus. While no details about how this ban will come into effect have been revealed, Chief Minister Yogi Adityanath put forth the suggestion that those who were involved in liquor and meat sale could now take up selling milk, so as to revive the glory of Mathura, which was once known for producing large quantities of animal milk. “Every effort will be made to develop Braj Bhumi and there will be no dearth of funds for this. We are looking at a blend of modern technology and the cultural and spiritual heritage for the development of the region,” he said.
The announcement comes just months before UP is set to go to the polls. While the move was celebrated by members of the saintly community and upper-class Hindus in UP, for the thousands of Muslims and Dalits employed in the meat processing and production industry, this means an uncertain future and large-scale unemployment. Prohibition of and a complete ban on meat production (particularly cow and cattle meat) have been long-standing political promises used by parties across the country in an attempt to win various voter groups over, including women and upper-caste Hindu voters (the traditional vote bank of the BJP). Such bans not only give rise to an illicit economy by encouraging bootlegging, but can also lead to a multitude of problems such as the issue of stray cattle, large scale unemployment, and extreme religious polarization.
Photograph by Wikimedia Commons
WHICH VOTER GROUPS WILL YOGI WIN OVER WITH THE BAN?Yogi Adityanath led BJP government has announced a liquor and meat ban in Mathura CityUP Chief Minister Yogi Adityananth’s liquor and meat ban in Mathura may help the BJP in UP Assembly elections next year
Several BJP MLAs during the 2017 assembly elections had promised that meat and liquor trading would be banned in areas that had famous temples.
As per Hindu mythology, Lord Krishna and his elder brother Balram were born in Vrindavan and Radha was born in Barsana. Due to the religious significance and tourism potential of these places, they were labelled as holy pilgrimage sites. A ban on meat and liquor in Vrindavan and Barsana was announced in 2017. The banning of meat and liquor in Mathura on the other hand will have a two-fold impact on the caste and religious dynamics of the area, further polarising the Hindu-Muslim dynamics in the district.
Given the proximity of the announcement to the UP Assembly Elections early next year, it is clear that the decision is a calculated move to appease the Hindu religious community. Top BJP leaders, including union home minister Amit Shah, have been focusing on the UP government’s efforts to revive the glory of the Hindu religious sites and have alleged that no other government but its own has paid attention to this. The BJP’s traditional vote bank – the Brahmin community – had reportedly been feeling alienated and neglected due to alleged preference accorded to Thakurs in the state under Yogi’s regime. In light of the 2022 Assembly Elections, all parties set out to woo the Brahmin community, which comprises roughly 12% of the population of the state. Both Samajwadi Party (SP) and Bahujan Samaj Party (BSP) have announced their intention to build statues of Lord Parashuram and organized conclaves (sammelans) in order to woo Brahmins. However, this move will now be viewed by the Brahmin population as an affirmation of BJP’s commitment to preserving their faith and culture and could give BJP a leg up in the upcoming elections and restore the popularity of CM Yogi Adityanath in the community.
Local cadres of the BJP are also likely to be pleased with this decision as they have revealed that several BJP MLAs during the 2017 assembly elections had promised that meat and liquor trading would be banned in areas that had famous temples. The move will serve to preserve the overall narrative that the Yogi government has been creating since 2017 – when a ban on cow smuggling was ordered and state police directed to close down illegal slaughterhouses.
However, the issue of religious polarisation might stretch further. Unlike places like Vrindavan and Barsana where the ban has previously been placed, Mathura has a significant proportion of the Muslim population involved in the meat production and trading business. Muslims also comprise 8.7% of the total population of Mathura district. In 2017, the state administration’s strict crackdown on slaughterhouses, packaging plants, meat retailers, and restaurants led to the shutdown of all establishments that were unable to produce licenses.
The move was seen by some as against Muslims and Dalits who are largely associated with the small-scale meat trade in the area and across the state.
After this move, allegations of cow vigilante groups burning down meat shops and lynching suspected meat smugglers instilled fear in the minority community. Many reportedly shut down their shops to avoid unnecessary harassment.
According to news reports, the decision to ban slaughterhouses also led to a stray cattle problem in Mathura. Large-scale unemployment among the Muslim community was reported as well.
The liquor ban, on the other hand, is not being viewed from a very communal angle, as it will affect business owners from all communities.
Photograph by Wikimedia Commons
Photograph by Diego Delso | Creative Commons
ECONOMIC IMPACT OF MEAT AND LIQUOR BAN
The ban of liquor and meat production not only directly impacts the livelihood of the communities engaged in production, distribution, and sales of both but also affects several auxiliary industries associated with the same. As of 2020, UP contributes to over 64% of India’s overall export revenue and employs a whopping 25 lakh people (directly or indirectly) as part of the industry. According to UP’s Animal Husbandry Department, meat exports account for Rs. 26,685 crores annually. As per estimates, UP’s meat processing and trade industry is estimated to be worth between Rs. 15,000 – Rs 22,000 crores. The closure of slaughterhouses across states has been estimated to substantially impact the Rs. 22,000 crores (3.5 billion) meat trade and the Rs 50,000 crore leather business. 38 out of 72 government approved meat abattoirs across India are in UP and lakhs are employed in these abattoirs and shops.
Similarly, on an average, each liquor shop in UP provides an annual revenue of around Rs. 1.10 crores to the government, and UP has 27,352 such stores. In 2020-21, the state government earned Rs.30,061 crores through excise duty and license fees paid by liquor stores. The excise department of the Uttar Pradesh government, in an RTI response to India Today, stated that the past four years of Yogi Adityanath’s government have seen a 74% jump in revenue derived from excise duty and license fees. The average daily sale of alcohol in the state is worth Rs. 70-80 crores. It should also be noted that since coming into power, the Yogi government has granted licenses to 2,076 new liquor shops.
In March 2018, the government had declared five Nagar Panchayats in Mathura to be holy places, and the liquor ban was imposed. It was reported that the five Nagar Panchayats had 32 liquor shops, and the loss of excise amounted to Rs 11 crores.
HISTORY OF LIQUOR AND MEAT BAN POLITICS
Ahead of the 2015 Assembly Elections in Bihar, Chief Minister Nitish Kumar promised to ban the consumption of alcohol in the state if he was re-elected. One of the objectives of this move was to curb domestic violence, often linked with excessive drinking. As a result of the decision, women voters turned out in record numbers to support Kumar and he swept the elections. After he assumed his term as chief minister, Kumar announced prohibition in the state and the Bihar Excise and Prohibition Act came into effect on April 5, 2016. However, since the announcement of prohibition, there have been allegations of weak enforcement and complicity of officials and local public representatives, giving rise to a huge illicit economy for the sale and consumption of liquor. This led to the rise of consumption and addiction of other narcotic substances in the state. Most people suffering due to the prohibition are from the backward or the Mahadalit communities. The lack of an alternative occupation and the temptation to earn quick commission from the illegal sale of liquor has compelled poverty-stricken youth, and women, who supported the prohibition, to indulge in bootlegging. Bihar’s unemployment rate by October 2020 was 9.8%, which is well above India’s 6.7%.
Similarly, the liquor ban has been an integral point of contention in electoral politics in South India, with parties in Tamil Nadu, Andhra Pradesh, and Kerala struggling to implement and remove similar bans and restrictions on the consumption and production of liquor for years. In Andhra Pradesh, prohibition was imposed in 1995 by NT Rama Rao but was reversed by his successor N Chandrababu Naidu in 1997 citing huge losses in state revenue and inability to implement it effectively. During the run-up to the 2019 Assembly Elections, current Andhra Chief Minister YSRCP President Jagan Mohan Reddy had promised to implement prohibition in three phases if they came to power. The phases included the takeover of all liquor sales by the state government, a reduction in the number of liquor shops, and alterations to operating hours. In May 2021, Reddy announced a major shift in his government’s liquor policy, moving away from prohibition (nishedham) to restriction (niyantrana).
Poor implementation of these bans often gives rise to an illicit economy, putting the health of the population at greater risk due to the consumption of duplicates, locally produced unsafe liquor, or a shift to the consumption of more harmful narcotics. Prohibition, particularly in the case of alcohol, encourages bootlegging, which becomes a lucrative activity despite high risk and often government officials are involved in the bootlegging of banned liquor products. States have often reversed liquor bans, as revenue from liquor sales accounts for over one-fourth of the state’s income, and the ban directly affects the state’s finances. Another major issue of a blanket ban on any industry is the economic impact of the same. Shutting down an entire industry means shutting down the livelihood of those involved in the industry directly, indirectly, and through auxiliary industries. It is important for governments to create a robust plan for generating alternative employment for those employed in the industry before complete shutdown of economic activity.
Contributing reports by Damini Mehta, Junior Research Associate at Polstrat and Abhinay Chandna, Akansha Makker, Animesh Gadre, Kashish Babbar, and Kavya Sharma, Interns at Polstrat.
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