Worried over decline in sale of liquor, the Confederation of Indian Alcoholic Beverage Companies (CIABC) has written to Delhi Chief Minister Arvind Kejriwal urging reduction of 70 per cent corona pandemic tax on alcoholic beverages to a “realistic and sustainable level”.
In a letter to Delhi CM, the CIABC pointed out that despite initial surge, the sale of liquor has fallen drastically in Delhi by 58 per cent in the month of May over same period last year. Whereas sales in neighbouring states seems to be bouncing back in sharp contrast to Delhi.” It may be noted that both UP and Haryana have effected a tax increase of not more than 10-15 per cent.. Also, it is an established fact that with such increase in prices, consumers start to down trade to cheaper products. That means that not only do total sales come down, the Government’s tax collection per bottle sold also comes down,” it said.
According to CIABC Director General Viond Giri, liquor distribution and retailing employ about 13,000 people in Delhi. The decline in sales is bound to lead to some shops shutting down and lay-offs at the wholesale and retail level. Even at best estimate, 3,000 to 4,000 people may end up losing their livelihood.
At pan-India level, the Indian Made Foreign Liquors (IMFL) industry contributes over Rs 1 lakh crore in taxes every year, supports the livelihood of 35 lakh farmers directly provides direct employment to thousands of people in manufacturing.
It also employs over 10 lakh people in the distribution chain and supports hundreds of ancillary industries in glass, tin, plastic and paper with a turnover of Rs 6,000 crore to Rs 7,000 crore.
“We had highlighted that the initial rush at liquor shops was misleading as the pent-up demand due to one-and-half months of lockdown was too high for barely 20 per cent liquor shops which had opened at that time. We had also pointed out that Delhi has porous borders and the prices in neighbouring states were much lower, thus creating scope for unlawful smuggling of liquor and depriving Delhi Government of its legitimate tax revenues,” CIABC said its letter.
Delhi’s falling liquor sales was not the only example as in Andhra Pradesh too, which had also implemented a price increase of 75 per cent, liquor sales have plummeted. “All this further substantiates our contention that the price increase of such proportions is simply unsustainable,” he added. Giri pointed out that “borders of Delhi are porous, the price difference between Delhi and neighbouring states is too high with 70 per cent cess, and once the supply lines in neighbouring states fills up one may apprehend large scale smuggling to Delhi”. “One must also bear in mind that with lockdown restrictions easing up, interstate traffic will become easier, further aiding unlawful smuggling of liquor to Delhi,” it added.