In 11 years, liquor sales up 77%, revenue 273% in Karnataka

BENGALURU: In the past 11 years, the consumption of liquor in Karnataka has grown by 77% and the excise revenue by a staggering 273%.

Sale of alcohol — Indian Made Liquor (IML) and beer— surged from 468.8 lakh boxes in 2007-08 to 830.6 lakh boxes in 2017-18, while revenue increased from Rs 4,812 crore in 2007-08 to Rs 17,948.5 crore in 2017-18. This means, sales or consumption reported a 7% annual average growth in the 11 years, and revenue 25%, which has largely been possible due to the increasing additional excise duty (AED). The excise duty has remained constant with just one hike of Rs 5 in 2016-17, which was only for IML.

AED has increased eight times, but the state once made small deductions in some slabs. The highest hike was in 2008-09 — 50% for nine slabs and 100% for the rest. The other seven increases have been in the range of 15% and 60%. Today, a litre of beer attracts Rs 10 as excise duty and 150% of AED on the declared price, while a litre of IML attracts Rs 50 as excise duty and AED in the range of Rs 144 and Rs 2,246.

“You see a similar trend in other states too. The excise department is expected to raise revenue and it is achieved through various duties imposed on products,” SL Rajendra Prasad, joint commissioner of excise, told TOI. Also, the target set for the excise department is increased every year; the past four targets have been at least Rs 800 crore more than the previous year. For the current year, the target was revised twice: Siddaramaiah increased it to Rs 18,750 crore in February, and it was subsequently revised to Rs 19,750 crore in July.

The high revenue targets has a direct impact on consumers, with farmers and the urban poor hit the most. C Kumari, a farmer leader from Mandya, said: “One can argue alcohol is bad for health. But the government is selling it, and along with the rates of everything else, liquor prices are increasing, eating into farmers’ budget.”

President of National Restaurant Association of India ’s Bengaluru Chapter, Manu Chandra, argues that urban poor are forced to drink the cheapest available, ‘moonshine’, which has far more adverse effects. While the government is happy with the collections, the industry says a change in policy is needed. G Honnagiri Gowda, president, Karnataka Wine Merchants Association, said: “We’ve become like daily-wage workers for the government. We get just 10% commission on sales, which we are dependent on for salaries, infrastructure and all the other costs. Several wine stores are incurring losses and many have shut shop.”

While this is the problem faced by winestores, bars and restaurants have other issues. “The cost of doing business has gone up. Along with this, there are issues like law enforcement, which we feel is unfair to businesses. Also, the fact that no new licence has been issued for many years is a problem, especially when the government forces you to buy more liquor than you want or punishes you for short-lifting of stock,” Chandra said.