Financial Daily from THE HINDU group of publications
Thursday, Mar 28, 2002
Industry & Economy
Government - Policy
TN to stop sale of cheap liquor
CHENNAI, March 27
THE Tamil Nadu Government has decided to discontinue the sale of cheap liquor with effect from April 14, the Finance Minister, Mr C. Ponnaiyan, told the Assembly on Wednesday.
Presenting the Budget for 2002-03, he said the cheap liquor scheme introduced from January 1 to prevent illicit liquor trade has not had the required effect. It had also resulted in a sharp decrease in the State's revenue.
Against the backdrop of the financial crunch this was a move that the Government could not afford. There had also been widespread representation from various quarters to do away with the scheme, he said.
To augment revenue from IMFL, it had been decided to permit bars in the IMFL retail shops in corporations, municipalities and town panchayats. A fee of Rs 3 lakh, Rs 2 lakh and Rs 1 lakh would be levied, he said.
Briefing reporters after the Budget presentation, the Finance Secretary, Mr R. Santhanam, said that during the first two months of the scheme, the Government lost about Rs 50-crore revenue.
(It may be recalled that under the cheap liquor scheme, the Government had made available IMFL at Rs 15 per 100 ml, against a normal price of Rs 28 per 100 ml. This scheme was introduced in the wake of a large number of deaths by consuming illicit arrack. The Government hoped to prevent such deaths and thought of the cheap liquor scheme. Simultaneously, it hoped to get more revenue from this scheme from higher volumes.)
The Government hoped to mop up about Rs 80 crore from bar licensing, Mr Santhanam, said.
Reacting to the Budget proposals regarding IMFL, industry sources said the move was a welcome one. It had not really helped the industry to increase sales, but on the other hand it had only cut into the sale of existing high-value categories.
For instance, in Tamil Nadu the sale of IMFL had remained around 14 lakh cases per month and the introduction of cheap liquor had not helped to push sales up by even half a lakh cases, they said.
Further, manufacturers had only introduced cheap liquor purely as a social obligation. Since they were already selling 100 ml in the high-value category, this segment was now bound to grow.
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