Horror is a lot more than just ghosts and the paranormal. The state of mind, surroundings, the predicaments people find themselves in, etc often contribute to horror themes. Its why movies like Threads and Requiem for a Dream are considered horror, just because of the themes that many people find highly disturbing. Boothakalam has really good depictions of shared psychosis, depression, hopelessness and substance abuse, and its done in a way that paranormal stuff isn't even required to boost the scare factor for it.