recorded a 60% dip in sales of Indian Made Liquor (IML) and beer after the state government hiked prices steeply after record sales on the first three days of reopening retail shops.

It declined from peak sales of Rs 232 crore on May 6 to Rs 61crore on May 20. The government had increased ad valorem rates by 21%-31% on May 6 in a bid to fill its coffers. This resulted in retail prices going up from Rs 50 to Rs 1,000 per bottle, depending on the brand. Beer was spared the hike.

According to recent data, 38 lakh litres of IML were sold on May 6 but only 25 lakh litres on May 20. “The government hiked Additional Excise Duty (AED) on IML anticipating huge revenue but the plan fell flat,” admitted some liquor shop owners.

The state government is worried as revenue collection of the excise department has dipped so much that it could not only miss the monthly average revenue target of Rs 1,900 crore but also fall short of the target by at least Rs 400 crore in May. This is despite pubs, clubs, bars and restaurants being allowed to clear old stock.

The fall in sales has badly impacted tax revenue. From May 4 to May 20, the collection was Rs 900 crore. The excise department officials said they expect about Rs 500 crore by May 31.

Liquor tax killing biz

The hike in tax is killing the goose that lays the golden egg. The move may have a huge impact in the long term,’’ said Arun Kumar Parsa, president, Karnataka Brewers and Distillers Association. Excise department officials said the AED hike is not the only reason for declining sales. KS Shivaiah, excise joint director (statistics), said of the 10,050 liquor outlets in the state, only 4,880 shops are currently open. Another major reason is large-scale return of migrants.

In Video:Liquor sales in Karnataka dip by 60% after duty increase

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