There was much euphoria when liquor shops were allowed to open on May 5, but data shows that sales and excise duty collection in the month of May has been quite muted.
While sales ranged from ₹143.03 crore on May 8 to ₹18.07 crore on May 30, despite an excise duty hike in the range of 17% to 25%, excise duty collection has not been spectacular. The total collection of excise duty in May is about ₹1,387 crore, far less than the normal average monthly collection which is between ₹1,800 crore and ₹2,000 crore.
The government estimates that excise duty hike will bring about ₹2,350 crore annually and help plug the losses of around ₹2,500 crore suffered during lockdown.
“While the steep excise duty hike made liquor expensive, people having no employment or facing salary cuts also are not spending. The large-scale return of migrants, who lost jobs, has also affected sales considerably. With restrictions on social gatherings still in place and people keeping a low profile due to COVID-19 concerns, sale has not picked up,” said B. Govindraj Hegde, general secretary of Federation of Wine Merchants Association, Karnataka.
Just about 4,000 alcohol vending outlets out of 11,000 outlets in the State were open in May. In some taluks, there are no wine stores even as bars remain closed, he added.
“This also shows that frequent hike in excise duty that brings about ₹2,000 crore revenue annually, could backfire. We are expecting muted sales of alcohol for at least the next six month,” Mr. Hegde said. Excise Commissioner M. Lokesh was not available for comments.
Waive licence fee for 2 months: Wine merchants
The Federation of Wine Merchants Association, Karnataka, on Wednesday met Chief Minister B.S. Yediyurappa seeking waiver of two months’ liquor licence fee and allowing payment of annual fee in three instalments during 2020-21.
In a memorandum, the federation said there is precedence to the State extending such gestures during crisis to the liquor industry earlier. It also pointed out that Maharashtra had announced payment of licence fee in instalments as holders had been severely affected by the lockdown.
In case waiver was not possible, the federation said the government could let go of the additional licence fee, which totals to about ₹75 crore annually. It also said since there was no fixed deadline for the pandemic to ease, bars should be allowed to function with liquor sales at MRP rates.
