With demonetisation, drought and court decrees, it appears the State had very little to cheer about last year.
For the first time in a decade, the State Excise Department recorded negative sales in liquor in 2016-17. Official data shows the State consumed nearly 34.6 lakh fewer cartons of alcohol — both Indian-made liquor (IML) and beer — in 2016-17 than in the previous financial year. While 8.37 crore cartons of IML and beer were sold between April 2015 and March 2016, the figure dropped to 8.02 crore cartons in 2016-17.
IML, which contributes to nearly 70% of the alcohol consumed in the State, was hit the hardest. Here, the sales fall over the past year was 8.23 lakh cartons or 71 lakh litres of hard liquor. This is surprising considering that alcohol consumption and sales have seen a big growth since the new millennium.
“We think this is because of continued drought that has hit economic activity in north Karnataka. From January onwards, we saw a decline in sales because there was no sowing at all. Farm labourers returned to their villages and States,” said Excise Commissioner Manjunath Naik.
While Bengaluru and surrounding districts were the only ones to register a positive growth, the sales dip in rural divisions seems to tally with Mr. Naik’s analysis. The Hosapete Excise Division, which covers Ballari, Chitradurga and Koppal, saw sales fall by 5%, while Belagavi and Kalaburagi divisions recorded a fall in sales of more than 3%. “There were lower sales in Mysuru and Mangaluru divisions also, but the reduction was not as much as in north Karnataka, where farming activity had almost come to a standstill,” Mr. Naik said.
This assumption is tallied by G. Honnagiri Gowda, president of the Karnataka Wine Merchants’ Association, who said the rural market has been severely curtailed by lower agricultural produce, and this is reflected in the variations of alcohol sales. “There is no daily wage work, there is no labour force, and there is no money. Farmers repay their loans and do not have money for liquor,” he said.
Demonetisation and the SC effect
Compounding the rural market crash’s effect on liquor sales last fiscal was demonetisation, implemented in November, and uncertainty over the closure of highway bars following a Supreme Court order.
Till December, Indian-made liquor (IML) sales slightly outpaced those of the previous financial year. After December, IML sales went south by nearly 5% across the State. “In a way, demonetisation affected sales. But, as the bulk of sales is in the cheaper bracket (86% being below ₹100 per sale), other factors, including the prohibition imposed on highway bars, played a bigger role,” said Excise Commissioner Manjunath Naik.
An indication of this was seen on April 1, a day after the Supreme Court gave partial relief to highway bars of the State to continue vending alcohol until their excise license ended.
Generally, March sees the highest purchase of alcohol as shops stock liquor before the Union and State taxes are hiked in the annual budgets. However, March 2017 was uncharacteristically dull, registering a growth of only 8%. However, on April 1, after the relief was granted, five lakh cartons were bought, as against the daily average of 2.5 lakh cartons.
Revenue targets achieved
That said, if there is one department the government can rely on to fill its coffers, it’s the one that accrues money from the State’s tendency to tipple.
Despite seeing a fall in alcohol movement, the Excise Department nearly reached its target in 2016-17. According to officials, the revenue target for the past year was ₹16,510 crore and the shortfall was just ₹23 crore. The low shortfall is owing to an increase in taxes. Overall, the revenue collected was nearly ₹1,000 crore more than the previous financial year.
However, with more uncertainty over the state of highway bars and wine shops, the department may miss its 2017-18 target of ₹18,050 crore.
