Rajasthan takes Rs 300-cr hit as alcohol sale falls sharply amid pandemic

Rajasthan takes Rs 300-cr hit as alcohol sale falls sharply amid pandemic

The highest losses came in the April when it garnered revenue of Rs 145 crore against Rs 670 crore in the corresponding period of last year to set up a deficit of Rs 525 crore in the first month of the current fiscal

Despite additional excise tax and Covid-19 surcharge on alcohol, Rajasthan witnessed a revenue deficit of over Rs 300 crore in the current financial year on the back of a sharp decline in sales amid the pandemic and particularly during the lockdown period.

Between April to August this year, the excise department earned a revenue of Rs 3,301crore compared to Rs 3,607 crore for the same period in 2019 a deficit of Rs 306 crore despite additional tax and surcharge on liquor.

The highest losses came in the April when it garnered revenue of Rs 145 crore against Rs 670 crore in the corresponding period of last year to set up a deficit of Rs 525 crore in the first month of the current fiscal. In subsequent months, the revenue has been more than that the corresponding months of last year because of higher taxes, but sales have dived.

The Rajasthan State Beverages Corporation Limited, which has rights for sourcing and pricing of Indian made foreign Liquor (IMFL) sold 46 lakh cases of IMFL in 2019-20, which fell to 29 lakh this year. Similarly, the sale of beer cases fell to 66 lakh from 149 lakh in 2019-20.

In comparison to 2019 (April to August 31), the sale of IMFL has reduced by 37% and beer by 56% in the corresponding period this year.

Liquor shops which were shut in Rajasthan during the lockdown, reopened on May 4 except in containment zones and those places which were under curfew.

To raise revenue amid Covid-19 crisis the state government on April 29 imposed an additional excise duty from 35%-45% on IMFL and 45% on beer. On the same day, the Rajasthan Excise Act was amended to raise the basic license fee for sale of country liquor and Rajasthan made liquor (RML).

Thereafter, on June 2, a surcharge was levied on IMFL, beer, RML and country liquor from Rs 1.50 to Rs 30 per bottle. The surcharge was made for the purpose of mitigating natural or man-made calamities like drought, flood, epidemic, public health exigencies, fire etc.

Though the government managed to go surplus with the revenue with imposing additional tax and surcharge but the volume of consumption declined steeply.

Secretary finance, Prithvi Raj said, “We are getting almost the same revenue as that of last year. At the same time the volume of consumption has decreased, which supports the state’s policy of discouraging liquor consumption.”

He said that other than April, the months from May to August are revenue positive – May registered 18% growth, June (15%), July (16%), and August (26%).

“There is this price elasticity of demand concept, which says that whenever there is an increase in the price of any product its consumption tends to fall,” said Prithvi Raj.

A senior official of the excise department said on condition of anonymity that there has been a decline in liquor sales compared to last year but the sale of IMFL is now rising. The department is focusing on increasing the lifting of the stock from depots.

“The sale of beer has fallen in almost all states, which is because of a steep rise in prices; the product is preferred consumed chilled and doctors during the Covid-9 pandemic have cautioned against drinking cold beverages. The tourist footfall is low and the situation is the same with bars,” said the official.

said the official.

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