Massive Disruption in Liquor Trade in The Last Quarter

The regime change in 2019 brought in a slew of changes in the state’s excise policy. The YSRC made an election promise that it would implement complete liquor prohibition in a phased manner if voted to power. And true to its words, a new liquor policy was introduced within three months of YS Jaganmohan Reddy taking over as chief minister.

But despite its good intentions, the new policy caused massive disruption in liquor trade in the last quarter of 2019. Private liquor shops were closed as government took over the running of liquor shops. The AP State Beverages Corporation Limited (APSBCL) has been entrusted with the responsibility of maintaining the retail outlets. The number of outlets were also reduced by 20 per cent as part of the government’s phased liquor prohibition move.

Apart from reducing the number of shops, the government also reduced the operating hours of the retail liquor outlets. The permit room system was also removed, making it difficult for tipplers in finding a place to drink as many of them do not prefer to drink at home. The government also imposed an additional retail tax (ART), making liquor costlier to discourage tipplers.

The new liquor policy is yielding positive results as the sales have come down. According to excise department officials, the sale of liquor came down by 40% in the month of October, by 25% in November and 25% in December, when compared to the corresponding months of 2018.

The government also announced a new bar policy, cancelling all bar licenses and reducing the number of bars by 40 per cent. However, the new bar policy has hit a road block with many bar-owners moving the high court, challenging the decision to cancel their licenses midway. The high court has given an interim relief to the bar owners by staying the cancellation of licenses and directing the government not to give fresh licenses till it gives a verdict.

The government also increased ART by 200 per cent on the liquor being supplied to bars. This move was also challenged in the high court, but the bar-owners did not get any relief as the court dismissed their petitions, saying the state government has powers to impose ART on liquor.

Despite the fall in the sale of liquor, government revenue was not hit thanks to ART. The government continues to receive more or less the same revenue though the sales have come down by 40 per cent. Excise officials claim the retail margin which used to go to private license holders earlier is now coming to government coffers due to the imposition of ART.

The government’s move to enforce liquor prohibition in a phased manner saw its flip sides too. Illegal liquor from other states are being smuggled into the state with belt shop organisers in bordering villages procuring liquor at lower prices from other states and selling it to buyers in AP. The number of such cases have gone up in the last three months after the new liquor policy came into force.

Arrack brewing has also increased despite increased surveillance and regulatory mechanism. The problem is more visible in the interior villages of the agency areas. The excise department had earlier announced nine out of 13 districts as arrack-free under the Navodayam scheme, but now, except one or two districts like Nellore and Prakasam, arrack has made a comeback in all other districts.

Year 2020 will have many challenges for the excise department. With the number of retail outlets and bars likely to further go down, preventing illegal liquor from flowing into the state and stopping the brewing of arrack will be the major challenges to tackle for the enforcement authorities.

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