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Excise policy to be revised soon, says state government
April, 03rd 2012

Uttar Pradesh government on Sunday said that the existing excise policy will be revised. In an official release, chief secretary Jawed Usmani said that a decision would be taken soon. Usmani also said the decision was taken to increase the state's revenue earnings from the excise department. According to the existing excise policy put in place by the former Mayawati government, the target revenue receipts for 2012-13 is more than Rs 8,000 crore.

At present, UP's excise receipts, up to February, 2012 are pegged at Rs 7,256.80 crore as compared to Rs 5,610.60 crore last year. The receipts have registered a growth of Rs 1,646.20 crore, or 29.3% over last year. In 2011-12, total revenue earning from the excise department was Rs 6,725.53 crore.

Though the tenets of the new policy are still under wraps, the state government is likely to roll back the annual excise policy format in UP. Under the Mayawati regime, a new system was created, where the excise policy spanning 2 years was put in place. In 2009, Mayawati government had, in a unique first, also allotted wholesale rights to distribute liquor in the state to Gurdeep Singh Chadha alias Ponty Chadha of Wave Inc. In principle, since the existing policy was modified, the decision was not overtly incorrect. However, this was the first instance, where an individual was given complete control over distribution of liquor in a state.

With Samajwadi Party having promised to make alcohol cheaper, if it was voted to power, a change in the state's excise policy was mandated for two reasons. One, Chadha was apparently favoured. The bigger concern, though, was that the excise policy instituted by the Mayawati regime would also directly impact consumers. If the existing structure were to remain, alcohol rates would spiral in the current fiscal 2012-13, with prices of nearly all categories of liquor set to rise, beginning with 5% increase in prices for mild beer and 6% for strong beer.

Uttar Pradesh is counted among the biggest liquor markets in the country. In 2009-10, the state consumed 22.92 crore litres of country liquor, 9.17 crore litres of Indian Made Foreign Liquor (IMFL) and 9.03 crore litres of beer. The increased prices would fill the state coffers, but result in a large number of unhappy consumers.

If the existing excise policy were to remain, IMFL prices would have increased by Rs 10 to Rs 25 from the cheap to premium range of liquor. For 2012-13, the hike in duty on IMFL has been fixed at 15%. And as a result, prices would increase, making a popular brand like Bagpiper and Officers Choice Whisky, for instance, cost Rs 310, up from the current Rs 270 levels. Experts feel that to sustain the growth levels, prices will have to be controlled. In an industry that is governed by the volumes of sale, the price of alcohol, both countrymade and IMFL, will determine profitability.

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