Karnataka banking on bars, online liquor sales

BENGALURU: The government is heavily banking on pubs, bars and clubs — which reopened on Tuesday for the first time since the nationwide lockdown — and a proposed system to home deliver liquor to customers to help fill its excise coffers.
The government is desperate to bolster excise revenue since income from other avenues such as motor vehicle tax, stamps and registration duties and commercial tax are struggling to emerge from the pandemic-induced slump.
However, working against the government is a sharp dip in consumption of liquor as revenue fell 17% between April and August as compared to the same period last year. The department collected Rs 7,580 crore through liquor sales till August 31, as against Rs 9,132 crore in the same five-month period last year. The monthly revenue average has fallen from Rs 1,826 crore to Rs 1,516 crore.
After a tepid Tuesday, the mood appeared to be warming up on Wednesday as about 50% of the 3,606 bars & restaurants and 50% of 526 pubs opened doors to consumers.
A major reason for sales going flat is the steep hike in ad valorem rates — 21-31% — on Indian-made liquor (IML) which the government imposed not long after it allowed retail outlets to sell over the counter. The move appears to have killed the proverbial golden goose as average monthly consumption of IML fell from 50 lakh cartons from last year to 40 lakh cartons this year. Consumption of beer also dipped 64% as sales dropped from 127 lakh cartons to 63 lakh cartons.
To achieve its revenue target of Rs 22,700 crore for this fiscal, the department must average sales of Rs 1,891 crore a month. Officials admit it will be a daunting task.
“So far, consumption is discouraging,” said excise commissioner M Lokesh. “Now that bars and other outlets have been allowed to open and offer dine-in services, we are hoping sales picks up. Of course, it will take some time for some normalcy to return to nightlife.”
K Syamaraju, South India Hotels and Restaurants Association, president said many outlets are facing a shortage of staff. “They went back to their native places and are yet to return. Almost all hotels (1,226 hotels with lodging and 75 star hotels) have begun serving liquor. We expect all pubs and bar & restaurants to be back in full swing by the weekend,” he said.
The state is also looking at introducing online sale of liquor to augment revenue, especially with the Supreme Court giving contactless sale the go ahead.
“We have formed an expert committee on this and will study how it works in other states like West Bengal and Jharkhand. We will take a final call after consulting all stakeholders,” said excise minister H Nagesh. “We want to make it mandatory for online delivery services to procure liquor from retail shops and not from Karnataka Beverages Corporations Limited [a state-run unit].”