State could continue with ‘single vendor’ for IMFL sales

GURUGRAM: The formal release of the state’s excise policy for 2018 is still awaited, but highly-placed sources told TOI that the state government could continue with its single vendor policy for IMFL liquor, which was introduced last year. It appears that the main reason for continuing with the policy is that the state government has generated substantial revenue.
An excise official who wished to remain anonymous said in case of a single vendor, the collection of arrears was easy, as those left in the market were bigger players, who had to stay in business for longer. “This is not the same for many vendors, as competition among them reduces the base price for a liquor bottle, which in turn reduces VAT collection (presently at 34.65%), which goes to the state coffers.”

Recently, Haryana had toyed with the idea of instituting a corporation to handle the sale of IMFL liquor. An order was issued to form seven committees to look into it, which read: “The government has decided to form a corporation to control the wholesale business of Indian Made Foreign Liquor”.

These committees, which included excise officials from across the state, were tasked with figuring out the modalities for different aspects of the project, including necessary changes to the Act, structure, warehousing and staff.

However, there is no indication the corporation is going to come up with this corporation, or include it in this year’s policy.

Several experts told TOI that if done right, the proposed corporation could have solved both the problems faced by the state — of collecting arrears and also of pricing — which, in case of the single vendor policy, depends on the whims of a monopolistic wholesaler.

The state might also consider substantially increasing the reserve price this year, further restricting the ability of smaller players to compete in the bidding process for sale of IMFL liquor.

As it is, there are only 2-3 major players who can afford to pay the reserve price, including Lakeforest Wines, which was the designated lone vendor for 2017.

A restaurateur TOI spoke to said the policy continues to restrict consumption of alcohol to only those who can afford to pay higher prices, which have gone up by 20-25% since the single vendor policy kicked in.

“There are enough people who will consume even if prices go up. It doesn’t matter for them. But compared to the earlier policy of multiple vendors, as well as the proposed one of a corporation, the single vendor policy appears to be an easy way for the government to make profits,” said another official.