In Karnataka, liquor revenue exceeds govt's target but beer sales lose fizz

Alcoholic beverages saved the day for Karnataka as the sector exceeded the revenue targets set by the BS Yediyurappa regime for fiscal year 2020-21, a feat few sectors could achieve due to the prolonged impact of the Covid-19 pandemic. The excise department, which collects levies on sale of Indian made liquor (IML) and beer, breached the targets by Rs 1,547 crore keeping up its performance despite the pandemic.

The Yediyurappa regime revised its revenue targets from IML and beer in May after the state underwent a spell of lockdown that was imposed to curb the spread of the infection. While the government fixed a target of 2,2700 crore, the excise department has mopped up 23,131 crore, as of March 31.

As for consumption, people in fact drank less of both liquor and beer compared to the previous year, probably because the beverages became even more expensive after the pandemic and money supply shrank after many people lost their jobs. While the IML sold 601 lakh carton boxes in 2019-20, it slipped to 583 lakh carton boxes during 2020-21. The fall in beer volumes was even sharper from 290 lakh carton boxes to 238 lakh carton boxes.

In percentage terms, while liquor consumption reached 97% of previous year’s levels, that of beer dropped 18% or almost a fifth of previous year’s levels.

The excise department struggled in the initial months. It began the financial year 2020-21 with almost nil collection due to the lockdown. The collections picked up only in July last year after the government raised excise duties to unprecedented levels to meet rising expenditure due to Covid-19 management.

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In terms of volumes, the IML sales picked up only from October, beating the previous year’s numbers. Sale of beer, however, was yet to consistently reach the previous year’s levels, as revealed by the March figures.

The liquor industry, however, has always opposed a raise in taxes arguing that a steep increase in retail prices would lead to decline in demand.

According to Arun Kumar Parasa, President of Karnataka Brewers & Distillers Association, steep hike in excise duties last year have helped the government surpass their targets for the year despite six weeks of closure.

While liquor consumption reached 97% of previous year’s levels, that of beer dropped 18% or almost a 5th of last year’s levels.



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