Double blow of lockdown, AED reduces excise revenue to a trickle 

Pubs and breweries report 30 per cent business; department records 12.3 per cent negative growth this fiscal

Published: 23rd September 2020 05:36 AM  |   Last Updated: 23rd September 2020 05:36 AM   |  A+A-

Express News Service

BENGALURU: The State economy is in the red. The pandemic has dried up its most lucrative resources – the revenue that comes from the Excise department. According to official sources, there is an unprecedented shortfall of Rs 1,203.78 crore in excise revenue, as compared to last year.

“The cumulative revenue for 2020-21 as on September 14 was Rs 8,662 crore, as against Rs 9,865.78 crore for 2019-20 on the same day last year. The shortfall is Rs 1,203.78 crore,” said a senior excise officer. The department registered 12.30 per cent negative growth as on September 14.

The pandemic and its fallout are the main reasons for negative growth in excise revenue this year. “There has been a steep fall in the consumption and sale of Indian Made Liquor (IML) and beer due to the pandemic and its fallout,” he said. The officer added that liquor sales were impacted due to the lockdown from March 23, and the government allowed opening of retail liquor (CL2 licensees) and MSIL stores in the State on May 5. Pubs, bars and clubs remained closed till recently, and were opened for serving alcohol to their dine-in customers only from September 1. 

From May 16, watering holes, including microbreweries, were allowed to sell liquor as takeaway. But business didn’t take off because the caveat for pubs and bars was to sell liquor at Maximum Retail Price (MRP). Most of them chose to remain closed till September 1, and business has started to revive slowly since then. “We are only doing 25 to 30 per cent of our pre-Covid business. Afternoon sales are dead because there is no office crowd. In the evenings, we are beginning to get some people but hardly enough to cover costs. We are allowed to reserve only 50 per cent of our total tables, and hardly get 25-30 per cent of occupancy,” said the owner of a prominent lounge bar in Bengaluru.

The government had increased excise revenue target from Rs 20,950 crore for 2019-20 to Rs 22,700 crore for 2020-21 in the Budget, before the Covid pandemic hit the economy and dried up government resources. “It’s simply not possible to achieve the target by April 2021,” said the officer. October to January 1 are the major revenue-generating months because of the festive season. But this year, there is no hope of making any profit. “It is a matter of survival for all of us,” said another prominent bar owner.
Excise revenue registered over 33 per cent negative growth between April and June this year, in comparison to the corresponding period last year.

According to official figures, revenue collected by the excise department in the first quarter of this financial year (2020-21) was Rs 3,846.76 crore, as against Rs 5,760.14 crore for the same period last year, marking a decrease of Rs 1913.38 crore this year. “There was 33.22 per cent negative growth between April and June. In April, there was no revenue generation because of complete lockdown. The government incurred a loss of approximately Rs 2,300 crore due to the closure of liquor stores between March 23 and May 4 during Lockdown 1,” said the officer.

IML sales in the first quarter this year were 100.76 lakh cases, as against 152.38 lakh cases last year. One case contains 8.64 litres of liquor.Retail liquor stores (CL2) and MSIL stores were allowed to open from May 4, but two days later on May 7, the government increased Additional Excise Duty (AED) on all 18 slabs of IML; from 17 per cent to 21 and 25 per cent over and above the 6 per cent AED, which was increased with effect from April 1.

The unprecedented increase in liquor prices was to help generate additional revenue of Rs 2,500 crore in the current fiscal. But it hit sales and consumption of IML “considerably”, said an excise licensee.Excise is the second biggest revenue generator for the government and contributes 18 to 20 per cent of revenue to the State exchequer, after commercial taxes.


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