Brexit and its Impact: ‘Irish Whiskey’ the Newest Emerging Global Whiskey

The word ‘Scotch’ is synonymous with whisky and in most instances, people interchange them without clearly realising what Scotch means. Scotch whisky is nothing but whisky that has been distilled and matured in Scotland. However, there is always confusion as to what is Scotch and the term is mostly used to describe any premium whisky. This is because of the novelty value that Scotch whisky had gained over the last 50 years, making it the most premium and desired whisky globally. Hence, Scotch became so popular that when you think of whisky, you instantly think of Scotch whisky. Some commodities are so specialised in certain countries that they become synonymous with those country names. For example, when you think of chocolates, you think of Belgian chocolates as the most desired chocolate,or when you think of premium watches, you tend to think of Swiss watches. Certain commodities are very specific or deeply rooted in certain countries.[1]

To understand the challenges faced by the Irish whiskey industry, it was first important to analyse how Scotch whisky is perceived across the masses. Many are unfamiliar with the fact that whisk(e)y was first produced by an Irish and not the Scots. There have been multiple debates and arguments over this fact between the 2 countries, however, it was finally proven that an Irishman, Pah-Dee was the first to create whiskey out of grain and water in the pre-Christian era.[2]Irish whiskey was leading the spirits market by a gulf especially in the United States (US) until the 1900s. This was when the Irish war of independence took place and the prohibition act was imposed in the States that banned all alcohol consumption and sale. The rigorous acts imposed by Britain on Irish exports further hit Irish distilleries.[3]There was also reluctance on the part of Irish distilleries to be innovative and use column still to create blended whisky with grain and malt as the Scots did. The new blended whisky could be produced at an economical price than single malt whisky and had complex flavour characteristics that appealed to the masses, especially in overseas markets like the US.[4]

The resurgence of Irish whiskey only began in the late 1980s when one of world’s leading distiller Pernord Ricard bought the Irish Distillers who owned the most reputed Irish whiskey brands, Jameson. This brought in heavy investment in the industry and resurrected the sales of Irish whiskey. More international drinks companies started putting their weight behind other Irish distilleries which lead to fast growth in Irish whiskey sales. However, Irish whiskey has always played the catch-up game with Scotch whisky since the mid-1900s, even after it gained massive reputation and became proud inventors of whiskey.[5]It failed to attain the same stature as Scotch even though the procedure to distil both whiskies was highly analogous and both industries followed the highest standards of the craft in whisky production. 

The United Kingdom (U.K.) had implemented strict policies and regulations to secure Scotch whisky from being faked or copied by different distilleries around the world. In case of Irish whiskey, no such regulations existed up until April 2019 when the European Commission laid down the policy that awarded Irish whiskey special geographical indication (GI) status. Under this policy, Ireland issued a comprehensive & technical guideline that clearly stated the procedure for producing Irish whiskey, methods involved, ingredients used, and outlined these links to the country of Ireland.[6]The policy was adopted to not only protect Irish whiskey from imitations or enforce actions against misleading versions, but to bring back the reputation that Irish whiskey had before the 1900s and become one of the most sought-after whiskies globally. 

Another key observation that could be made from this policy from 2019 was that with imminent withdrawal of the UK from the European Union (EU), the latter was bound to lose on trade it generated with export of Scotch whisky that was already recognised & been granted special status under the European Commission since 1989. This gave Ireland and Irish whiskey an opportunity to stake its claim as the highest quality and most sought after whiskey being produced out of the EU. The policy would put Irish whiskey as a safe-guarded tradable commodity under the bracket of the European Union, hence, it was bound to receive numerous tax rebates not only within the EU but also with countries who are key trade partners of the EU. It not only helped Irish whiskey industry or Ireland, but also boosted the trade for the EU. With Brexit destined to happen soon, the EU would not be able to export Scotch whisky under its umbrella. Hence, it was not a coincidence that the rise of Irish whiskey coincided with the approval of its special GI status under the European Commission.[7]EU trade commission had ample to gain from the approval of this policy which has safeguarded Irish whiskey. 

Even though the formal withdrawal of the UK took place in January 2020, it is still under the process of holding and finalizing trade negotiations with the EU. Currently the UK is undergoing post Brexit transition period, which means it will continue with the EU customs and trade rules until 31stDecember 2020. There is a possibility that there is no deal between UK and EU leading to high tariffs & barriers for Irish whiskey in UK. On the contrary, if both parties come to term for a favourable deal, most tariffs are likely to remain unchanged which will benefit the trade of both Scotch and Irish whiskey in UK and outside of it.[8]With the global economy and the world currently battling with the Covid-19 pandemic it is highly unlikely that any deal could be finalised this year which can further push the transition period for up to two years.[9]

Even though the grant of special GI status permitted to Irish whiskey is not even a year old, substantial developments have taken place to understand whether the policy will achieve its goals. As discussed above, one of the main challenges and goals for Irish whiskey has been to reclaim its position as the whiskey of the highest standard vis-a-vis Scotch whisky. With the growing demand for Irish whiskey around the world and the European commission approving the policy to give special status to Irish whiskey, many major countries also granted the special status to Irish whiskey in the latter half of 2019. Likes of Japan, China, Australia, South Africa and lately India have agreed to safeguard & grant special GI status to Irish whiskey. Hence, Irish whiskey being sold in these countries must be authentic Irish whiskey distilled in Ireland that complies with the GI policy guidelines.[10],[11]This truly signified that Irish whiskey has set a high standard for itself in the whiskey industry and global markets expect it to maintain that standard, hence this policy is being accepted beyond the realm of the EU. 

Another development that suggested that granting special GI status has enhanced Irish whiskey’s reputation and demand in the US market (which is also the largest market for Irish whiskey globally) was the exemption of trade tariffs imposed by the US. In October 2019, Trump administration had imposed high tariffs at upwards of 25 percent on numerous EU goods which included Scotch whisky. However, it exempted Irish whiskey given the standard it had maintained in the last decade and the continuously rising demand for the spirit in its market.[12]

The initial signs post the grant of GI status of Irish whiskey have been encouraging. Although, it cannot be inferred that it has been successful in achieving its goals within such a limited time frame. The growing demand for Irish whiskey has brought in support from many countries, but the bigger challenge remains as to how long the growth can continue, especially with the multitude of new whiskies entering the market and gaining popularity like American Bourbon whiskey, Japanese whisky, etc. It was the reluctance in innovation that set Irish whiskey behind Scotch in the 1900s. With such policies that encourage and safeguard Irish whiskey, the future once again looks bright for the industry, but only time will tell.

[1]“What’s the Difference Between Scotch, Whiskey and Bourbon?,” March 22, 2012,’s-difference-between-scotch-whiskey-and-bourbon.

[2]“Proof at Last – the Irish Invented Whisk(e)y! – Whisky Magazine,” accessed April 9, 2020,

[3]“Irish Whiskey Through The Ages | Walsh Whiskey Distillery,” Walsh Whiskey | The Irishman Premium Whiskey Range | Writers’ Tears Irish Whiskey(blog), accessed April 9, 2020,

[4]Peter Bodkin, “A Century Ago Irish Whiskey Dominated the World – so What Happened?,”, accessed April 9, 2020,


[6]“Irish Whiskey Gains GI Status from European Commission,” accessed April 9, 2020,

[7]Sunday, August 18, and 2019-04:34 Pm, “Irish Whiskey Wants to Turn Brexit on Its Head,” August 18, 2019,

[8]“UK Plans to Introduce Border Controls on EU Goods after Post-Brexit Transition,” Reuters, February 10, 2020,

[9]Adam Rasmi, “The UK and EU Brace for a Brexit Problem They Didn’t Anticipate,” Quartz, accessed April 9, 2020,

[10]“Irish Whiskey Awarded GI Protection in India,” September 2, 2019,

[11]“Irish Whiskey to Benefit from EU-China Trade Deal,” accessed April 9, 2020,

[12]“Irish Whiskey Dodges Tariffs While Scotch Malt Whisky Takes a Hit – Potstilled,” accessed April 9, 2020,

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Despite a brutal second wave with cases peaking in April-May 2021, India’s Gross Domestic Product (GDP) grew at a record pace of 20.1 percent in the April-June 2021 quarter compared to the corresponding period last year. The GDP, in absolute terms, stood at Rs 32.38 lakh crore (constant prices). This was actually lower by 9.2 percent than the numbers seen in the April-June quarter of 2019-20. In fact, as the figure below shows, the April-June 2021 GDP numbers are closer to the levels seen during the January-March 2017 quarter.

Source: MOSPI (Annual and Quarterly Estimates of GDP at constant prices, 2011-12 series)

While growth in the April-June 2021 quarter is promising and reflects recovery from the deep plunge seen in April-June 2020, comparisons are being drawn with the pre-Covid levels. 

But what are these pre-covid levels? Should numbers of a single quarter, say April-June 2019-20 be used as the benchmark, or an average growth seen in the previous few quarters be considered as a benchmark for comparison? 

An alternate strategy

We propose an alternative way through which, we compare the present Gross Value Added (GVA) numbers (in level terms) with the numbers obtained using simple univariate time-series forecasts. These forecasts are obtained by exploring the time-series properties of the variable of interest. In particular, these forecasts are arrived at using the Autoregressive Integrated Moving Average models (ARIMA models). ARIMA is a statistical analysis model that uses time-series data to better understand the facts and to predict future trends. 

This comparison helps in assessing how distant are the current GVA numbers from the levels which would have been achieved had there been no shock in the form of the COVID-19 pandemic.   

Since GDP includes taxes, we look at the activity-based variable after excluding the impact of taxes. The variable of interest, therefore, is the Gross Value Added (GVA). We use the GVA data available from June 2011 till December 2019 and extend it using the projections obtained from a univariate ARIMA model. As mentioned before, in this model previous observations are used to predict future values. Therefore, we have excluded the period post-December 2019 to ensure that the trend is not influenced by the COVID-19 shock. 

The figure below shows the raw data along with the projections for the subsequent six quarters (from March 2020 onwards) based on the ARIMA model. These projections present a picture of the GVA trends under normal circumstances, i.e. if the economy would not have been subjected to the COVID-19 shock.

Adjustment for seasonality 

An economy, over the long term, experiences a concept known as seasonality. These are seasonal fluctuations, movements, that recur with similar intensity in a given period (such as months) each year, thus showing a clear pattern of peaks or troughs over a sufficiently long time period. Broadly, seasonality arises from several calendar related events such as – weather-based factors: monsoon, winter or summer months, agricultural seasons: harvest or sowing season, administrative procedures: tax filings, financial year closure, working days, festivals: Diwali, Christmas, etc., institutional: Annual budgets or Fiscal year ending, social and cultural factors: Statutory holidays, etc.

Such seasonality needs to be adjusted to comprehend the underlying trend, cyclicality, and other movements for a better understanding (Pandey et. al, 2020). 

The quarterly GVA series shown above exhibits seasonality and therefore we seasonally adjust the extended GVA series (GVA values till December 2019 along with the forecasted values) and compare with the seasonally adjusted actual data post-December 2019.  

The difference between the series till December 2019 extended with time-series forecasts and actual series post-2019 (both adjusted for seasonality) would give an assessment of the shortfall in economic activity arising due to the COVID-19 shock. 

Shortfall due to COVID-19

The table below shows the differences between the estimates based on the time-series forecasting and the actual values. We present this exercise for the overall GVA as well as its components. The key highlights of the comparison exercise are as follows:

Table 1: Difference between the Actual values and Estimated values (Rs. Lakh Cr)

*Both Actual and Estimated Values are seasonally adjusted

1. In the January-March 2020 quarter, the difference between the forecasted (estimated) values and the actual values is small. This is due to the limited impact of the pandemic during this quarter. 

2. However, the difference widened to Rs 8.7 lakh crore in the April-June 2020 quarter. This was the period of the nationwide lockdown. As a result, the economic activity was adversely impacted. The major difference was seen in the contact-intensive trade, hotels, and transport sectors. Since agriculture was not impacted by the pandemic, the projected and the actual agricultural GVA is the same. 

3. With the gradual opening up from the July-September quarter, we see that the gap between our estimates and actual values is reduced. However, the financial sector continued to reel under the impact of the pandemic. While some improvement was seen in the GVA of the trade, hotels, and transport sectors in the July-September quarter, there still was a significant shortfall of Rs. 1.4 lakh crore.4. In the October-December 2020 and the January-March 2021 quarter, a distinct improvement is seen in the actual overall GVA numbers. The gap between the estimated and the actual values for the overall aggregate GVA narrowed to Rs 0.8 lakh crore and Rs. 0.3 lakh crore for Oct-Dec 2020 and Jan-Mar

2021 quarter respectively. Except for the trade, hotels, and transport sector, the gap was less than Rs 1 lakh crore for all the sub-sectors. 

5. But, the April-June 2021 quarter revealed that the gap has widened to the tune of Rs. 5.3 lakh crore. This shows that while the recovery was underway, the onset of the second wave and the consequent partial lockdowns pulled back the growth momentum to some extent. The sectoral variations are also worth noting. While agriculture, mining, and manufacturing showed stellar performance despite the second wave, the contact-based services sector (trade, hotels and transport) pulled down the growth. The construction sector also bore the brunt of the second wave.

The above exercise presents an alternative approach to assess the shortfall in GVA numbers due to the COVID-19 shock. There are sectoral variations: while agriculture posted a robust growth and the manufacturing sector was relatively less impacted, it is the contact-intensive sector that primarily got affected due to the shock. Our exercise shows that after the April-June 2020 quarter, the economic recovery was gaining momentum. However, the second wave led to a pause in the recovery process. 

Going forward, with a sustained pick-up in the pace of vaccinations, we should see economic recovery getting back on track. The high-frequency variables such as exports, PMI manufacturing and services, petroleum products consumption, electricity consumption, and GST collection, etc., also suggest a pick-up in economic activity since the beginning of the second quarter. 

The authors are Senior Fellow and Fellow respectively at the National Institute of Public Finance and Policy (NIPFP), New Delhi. Views are personal.

The Union Budget for FY 2021-22 presented on February 1, 2021 has the distinction of being the first budget after Covid-19 devastated much of the world, including India. India registered a historic contraction of nearly 24% in its Gross Domestic Product (GDP) in the first quarter of the current financial year, unemployment surged, small enterprises suffered acutely and vulnerable households slipped into poverty. During the course of the year, the government announced a series of measures to alleviate the Covid-19 induced stress. Since then, there have been signs of a nascent recovery in the economy. In this context, there has been tremendous anticipation around this budget to put India firmly back on the growth path. 

Towards this end, the budget has made many noteworthy announcements. Two key announcements stand out viz., a push to the privatisation agenda by announcing the privatisation of two public sector banks and an insurance company, and the establishment of an asset reconstruction company to take over the Non-Performing Assets (NPAs) of banks. 

Privatisation of public sector banks

Signalling a clear and key policy shift, the government has announced an ambitious and strategic privatisation policy by proposing to disinvest/strategically sell public sector entities (PSEs). Towards this end, the government has approved four sectors as strategic, where it will retain a minimum number of entities. It will pare down its presence above this minimum in strategic sectors, and completely in non-strategic sectors. Notably, banking, insurance and financial services have been identified as  strategic sectors.  

A number of central PSEs (including Air India, Shipping Corporation of India and the Container Corporation of India) have also been identified by the budget for divestment this fiscal year. Further, the NITI Aayog has been tasked with identifying the next pipeline of central PSEs for disinvestment.  Within this overall context, the current budget has also proposed to privatise two public sector banks (PSBs) in addition to Industrial Development Bank of India (IDBI), and a general insurance company.  

Privatisation of PSBs is not a new idea. It was attempted earlier as well.  The former Finance Minister, Yashwant Sinha, proposed to bring government stake below 51% in PSBs in early 2000s. However, this did not garner enough support. Given the burgeoning requirement of capital by PSBs and the limited fiscal space with the government, it has now become imperative to find other avenues to bridge the gap.  The proceeds of the disinvestment could help release government resources to more productive uses, particularly as government finances too have come under tremendous pressure in the wake of the pandemic.  

Moreover, with the approval of banking as a strategic sector, and the maintenance of public sector presence, the government should be able to avoid any compromise on its social agenda – a key concern that has been flagged earlier on privatisation of banks. 

Resolution of bad assets

Flow of credit is an imperative to meet the needs of a growing economy. A surge in bad or non-performing assets impedes the flow of credit. This is because banks must make higher provisioning to cover their bad assets, reducing the overall credit available to firms and households. It also makes banks risk averse. 

Measures to provide relief to borrowers such as the moratorium on loans – could exacerbate the problem of bad loans. An improvement in the NPA ratio of the banks was visible before the pandemic but the policy support extended to borrowers could impact the asset quality of banks through postponement in recognition of bad assets. 

The Financial Stability Report released by the Reserve Bank of India (RBI) in January this year estimates a sharp rise in the stressed assets on the banks’ books, particularly in the case of public sector banks. A number of measures were taken by RBI to improve the flow of credit by banks; however, the offtake of credit is still slow. The need of the hour therefore is to resolve these bad assets and clean up banks’ balance sheets so they can begin to lend more freely. 

The budget tries to address the problem of bad loans by announcing an asset reconstruction company (ARC) and an asset management company (AMC). This mechanism is expected to take over the stressed assets from banks, manage and eventually dispose them for value. The assets may be disposed of to potential buyers which include alternative investment funds (AIFs).  

The idea of a “bad bank” has apparently been inspired by the experience of countries such as the US and Malaysia. The Malaysian government, for instance, set up “Pengurusan Danaharta Nasional Burhad” – a government-backed AMC – that successfully bought and resolved bad assets in the Malaysian financial system in the aftermath of the Asian Financial Crisis in late 90s. 

While details on the Indian initiative are sparse at this point, the proposed mechanism is understood to not be a government owned entity. Instead, this mechanism would be primarily led by banks, with the government offering some support – perhaps in the form of a guarantee. The success of this proposal would depend on how well the proposed entity is managed. It will also depend on the capital allocation strategy by banks and how much money the government sets aside for this entity.

The reference to Alternate Investment Funds (AIFs) and other entities as potential buyers perhaps hints at measures for improving the efficiency of the stressed assets market – an important step that must go hand in hand with the creation of a “bad bank”.  However, a pitfall that the proposed mechanism must guard against is the potential “moral hazard”. It must disincentivise, rather than incentivise, poor decision making by the banks that led to the bad assets in the first place. 

Both the above announcements mark important interventions in the banking sector. Their success will however depend on the actual details – of the institutional structures and enabling frameworks put in place. Implementation will also be key, given the competing interests when it comes to privatisation and the government’s own poor track record on divestment.  This will, therefore, be a keenly watched space in the coming year.  

The views expressed in the post are those of the author and in no way reflect those of the ISPP Policy Review or the Indian School of Public Policy. Images via open source.

On February 01, 2021, Finance Minister Nirmala Sitharaman introduced the Budget for FY 2021-22 in the Parliament. Budget announcements are always a highly anticipated event in India; this time the expectations were even higher for the government to provide a credible roadmap for recovery. However, ahead of the Budget, another bill rumored to be proposed during the session was making news. The to-be-proposed Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 has taken the nascent crypto-industry in India by surprise. The Bill has dual objectives of (i) banning ‘private’ cryptocurrencies in India and (ii) creating a framework for the Reserve Bank of India to issue official digital currency. While further details on the Bill are awaited, now is an opportune time to look at the current status of digital currencies in India and around the world.

The Reserve Bank of India (RBI) has viewed cryptocurrencies with a jaundiced eye. In April 2018, the RBI issued a circular, “prohibiting banks and entities regulated by it from providing services in relation to virtual currencies.” The circular was subsequently overturned by the Supreme Court on grounds of being a “disproportionate” response by the RBI. It further asserted that there was no evidence that any regulated entities had indeed incurred losses or instability on account of virtual currencies. 

Understanding Digital Currency

For a preliminary understanding of digital currency, one can look towards its most popular example – BitCoin. It was launched against the backdrop of the 2008 global financial crisis (GFC) as a bulwark against excessive printing of currency by central banks. The mystery surrounding the inventor, the legendary Mr. Satoshi Nakamoto, only added to the allure of the new digital currency. Here was a currency that was decentralized and maintained user anonymity while ensuring complete transparency for all transactions. BitCoin is limited to 21 million units, which are mined by solving complex mathematical problems (a.k.a. proof of work) and can then be traded on BitCoin exchanges. Blockchain technology, upon which BitCoin is built, has a certain democratic appeal; blockchain ledgers are immutable and can be changed only when such a change is validated by a given number of participants. Despite these advantages, there has been criticism against BitCoin or any of the non-fiat digital currencies to be used as a reserve currency, especially on account of limitations to being used as a medium of exchange

Opportunity for a Central Bank Digital Currency

In recent years, and perhaps consequentially, central banks around the world have begun to evaluate the possibility of a sovereign-backed digital currency also known as a central bank digital currency or a CBDC. This begets an obvious question – what indeed is a CBDC? Traditionally, money comprises cash, deposits maintained by commercial banks with the central bank and deposits with commercial banks. A CBDC introduces a new form of digital money which is a liability of the central bank. In theory, even retail participants could hold a CBDC in the future. Secondly, one might wonder, what are the motivations for issuing such a form of money? A report published by the Bank for International Settlements (BIS) in 2020 broadly categorizes the merits and risks of a CBDC as follows:

a. Payment systems – motivations and challenges

This category includes a multitude of motivations such as ensuring continued access to risk-free money in societies where cash is going out of fashion, improving financial inclusion, enhancing efficiency of cross-border payments, etc. Key risks in this category include ensuring cyber resilience and balancing public privacy needs with anti-money laundering requirements.

b. Monetary policy – motivations and challenges

If CBDCs are designed as interest-bearing instruments, then monetary policy transmission would, in theory, be immediate. This could incentivize commercial banks to accelerate passing on the effects of changes in policy rates. Whether CBDCs should indeed be interest-bearing instruments is a design challenge requiring further study.

c. Financial stability – motivations and challenges

A key motivation for central banks to evaluate issuance of CDBCs is to pre-empt the risk of loss of monetary sovereignty on account of displacement by privately issued digital currencies such as Diem (previously called Libra) by Facebook. However, introducing a CBDC introduces the possibility of a bank run in times of crisis from commercial deposits to central bank money.

Way Ahead

Money is an economic, social, and political phenomenon. Introduction of CBDCs requires careful planning, analysis, and balancing risks with efficiency motivations. Design choices abound in terms of technological architecture as well as features embedded in the instrument. In the Indian context, a well-designed pilot project aligned with social and economic realities is paramount. Internationally too, interest in CBDCs has increased, partially on account of the COVID-19 pandemic. A survey conducted by the BIS in 2020 revealed that 86% of central banks (out of a total of 65 respondents) were actively engaged with CBDC research, evaluation, and/or development (see figures below). China famously leads the pack in digital currency development adding a currency dimension to its competition with the United States.

Figure 1 Source: BIS Central bank survey on CBDCs. 1 Share of respondents conducting work on CBDCs.

Adoption of new technology is often scary, and rightly so, especially in cases where it has the power to improve or destroy entire systems. India’s financial system has been revolutionized by fintech, especially in the digital payments space. It is indeed time we re-visited the idea of money in light of the technology now available at our disposal. The to-be-proposed Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 signals India’s willingness in this regard.

The views expressed in the post are those of the author and in no way reflect those of the ISPP Policy Review or the Indian School of Public Policy. Images via open source.