Above: The new policy will allow liquor shops to sell Indian Made Foreign Liquor
To be implemented from April 1, the new liquor policy in Madhya Pradesh is aimed at increasing revenue; but for now, it will have to retain all the old features until the Lok Sabha polls are over
By Rakesh Dixit in Bhopal
Nothing drives a government to take as many U-turns as liquor. The recent past has seen states, notably Kerala, where a new government took over and overturned the previous regime’s policy which was aimed at the gradual curbing of the sale of liquor. The CPI(M)-led government in Kerala set aside the previous Congress regime’s liquor policy simply because excise is one of the largest revenue generators for the southern state.
Now the cash-strapped Kamal Nath government in Madhya Pradesh has unveiled a new liquor policy that unabashedly seeks to rake in the moolah with a new provision that allows country liquor shops to sell Indian Made Foreign Liquor (IMFL) in case the excise revenue falls below expectation. There are about 2,700 country liquor shops and 1,000 IMFL shops in the state.
In effect, the Congress government has kept the option of selling both kinds of liquor from the 3,700 outlets that operate in the state. However, the government is unlikely to exercise the option anytime soon, not at least till the Lok Sabha elections are over, according to government sources.
Former Chief Minister Shivraj Singh Chouhan has raised objections to the new provision. “Please roll it back immediately in the interest of the state’s future by freeing yourself from political compulsions,” he said in a letter to the chief minister. Calling liquor a curse on society, the BJP has said that it will wreak havoc on the youth in rural areas.
The Congress has dubbed the BJP’s opposition sheer hypocrisy. State Congress spokesman Bhupendra Gupta alleged that the former chief minister had links with liquor cartels. On the one hand, Chouhan would talk of prohibition while, on the other hand, he ensured proliferation of liquor shops during his tenure. Congress state media coordinator Narendra Saluja accused the former chief minister of influencing the liquor policy in such a way during his 15-year tenure that only his chosen manufacturers benefitted.
Countering the Congress’s allegations, Chouhan says his government had decided not to allow a single new shop to come up and wanted to gradually go down the path of prohibition by creating awareness. After the ban on the sale of liquor in Bihar in 2016, Chouhan, too, mulled the same idea in the state to increase his vote-bank. He ordered the closure of 58 liquor shops located within a five-kilometre radius from the banks of the river Narmada during his “Narmada Sewa Yatra” in 2017. Before the last assembly elections, he had also promised a blanket ban on the sale of liquor in the state if re-elected.
To convey the message that he was serious about his anti-liquor campaign, he had said that local police stations should have a list of routine customers at every liquor shop. The government had sent several teams of administrative officers to Gujarat and Bihar—the two states where prohibition is in force—to study the impact of the policy. It triggered intense speculation whether Madhya Pradesh too would go in for prohibition.
However, the state government evaded a direct reply to the question and later came out with a stand that it would go in for “phased prohibition”. The then finance minister, Jayant Malaiya, said in the assembly that banning the sale of liquor would hurt the government’s coffers. He reasoned that it was not practical to impose prohibition as the state shares its boundaries with five others—Uttar Pradesh, Chhattisgarh, Rajasthan, Gujarat and Maharashtra. Barring Gujarat, alcohol isn’t prohibited in any of these states. Hence, enforcing prohibition would lead to largescale smuggling of liquor into the state, as was happening in Gujarat.
The BJP’s hypocrisy over liquor was glaringly evident in the state government’s decision last year to allow those with an annual income of over Rs 10 lakh to stock as many as 100 bottles of expensive liquor in their homes for an annual fee of Rs 10,000. The minimum price of each bottle must be Rs 1,000. The then excise commissioner, Rakesh Shrivastava, justified the decision, saying there was a demand from large corporate houses who are increasingly setting up base in the state to relax the liquor policy so that they could relocate staff from other states to Madhya Pradesh.
The new excise policy, which was approved by the state cabinet on March 5, was notified on March 10. By then, the model code of conduct for the Lok Sabha elections had come into force. The Election Commission of India has cleared the draft of the new liquor policy with a rider that rules in the old policy have to be followed. The policy, to be implemented from April 1, will retain all the features of the old one till the Lok Sabha polls are over and all major changes can be effected only after that.
Liquor is a major source of income for the state government. For the year 2018-19, while the government had set a target of Rs 9,000 crore from excise duty on the sale of liquor, the total revenue generated was Rs 8,200 crore. Officials in the excise department said the yearly revenue target is increased by 10 to 15 percent every year.
Revenue from excise duty on liquor has nearly doubled in the past few years. In 2013-14, the excise department generated a revenue of Rs 5,900 crore.
The government has set in motion the process of renewal of old licences with 20 percent hike in licence fees. This is an old practice in the state’s excise policy. Hike in renewal fees has resulted in increase in liquor prices year after year. The year 2019-20 will be no exception. Successive governments have taxed liquor heavily to mop up revenue and Madhya Pradesh is the second most expensive state in the country for liquor after Karnataka.
Excise department principal secretary Manu Shrivastava said that in case liquor shop owners refuse to pay 20 percent hike in renewal fees, the government will distribute licences through the lottery system. If that too fails to achieve the desired impact, the remaining shops will be auctioned for highest bidders to get the licence, he told India Legal.
Online applications are being invited from prospective licence seekers. The applicants are required to deposit 70 percent of the projected revenue from the liquor shops they want. The projected revenue will be decided by the government. This is besides the 20 percent which is to be paid as renewal fee.
The department sources said that half the existing liquor outlets could be auctioned because of the unwillingness of licence owners to pay 20 percent more as renewal fee.
Minister for Commercial Taxes Brajendra Singh Rathore says the new policy has been framed keeping in mind all aspects so that the revenue of the government does not take a hit and the common man is not troubled. Madhya Pradesh is under heavy burden with a staggering Rs 2 lakh crore debt.
It cannot afford to let go the opportunity to mop up as much revenue from liquor as possible.
The government is aware that unlike other items, heavy tax on liquor does not attract public ire. The previous government even rationalised hiking liquor prices on the grounds that costlier booze will deter people from consuming it and that is good for society. But for tipplers, that is never a deterrent.