Besides, there are 1,450 bars and restaurants in Telangana and another 790 in Andhra Pradesh whose new licencing will begin soon. In the usual course, the increase in revenue through sale of liquor from both retail outlets and bars would be around 15%, but as elections are less than two years away, the revenue departments in the two states are expecting a hike by 50% at around Rs 12,500 crore.
This is a major reason why the states, mostly poll-bound AP and Telangana, were not ready to switch over to GST on liquor at least before the next Assembly elections.
Currently, liquor and petroleum are the two major products left out of purview of GST. If these two products are brought under GST, they will be cheaper by at least 25-30%.
However, that is unlikely to happen in the next two to three years due to various reasons. If the Centre is not ready to share its revenues on petroleum, states are unwilling to part with income on alcohol. Now, states are collecting VAT and commercial taxes up to 48% on some brands of costly liquor while it would be cut by half under GST, Telangana excise officials told The Sunday Guardian.
Usually, the sale of liquor goes up steeply a year before the Assembly elections and not during the Lok Sabha polls, according to past data gathered by the Telangana excise department. Both the sitting MLAs as well as ticket aspirants would start spending money on supplying liquor to their supports and cadre in election year.
The Telangana government has received a record number of 41,500 applications for issuing licences to 2,219 retail liquor outlets, though a non-refundable fee for each application has been increased to Rs 1 lakh from Rs 50,000 two years ago. The licences would be for a period of two years, till 30 September 2019. The number of applications two years ago was around 30,000.
Unlike last time, several politicians, most of them from the ruling TRS, have shown interest in applying for retail liquor outlets in view of the 2019 elections. The MLAs and Greater Hyderabad Municipal Corporation ward members are directly monitoring the applications process and applying through their trusted men. They believe that having a liquor shop will certainly boost their political clout.
The licences will be issued through lottery next week. The department is keen on ensuring revenues by extending retail outlets time from 10 am to 11 pm, as against the existing time of 11 am to 10 pm. The timings have been increased keeping in view the representations from private employees who return home only after 10 pm, officials said.
Apart from this, the government has decided not to increase MRP (maximum retail price) of a majority of brands in medium and low end segments, while the costly brands may see a marginal hike by 10%, to keep the cash registers ringing. “Increase in timings of outlets and freezing of MRPs will help us boost sales,” said M. Sridhar Reddy, an office-bearer of Hyderabad Wine Shops’ Association.
The Telangana government’s other measures like increasing the number of bars by 10% and allowing micro breweries in big shopping malls, too, is expected to boost revenues from liquor sale. If the state got revenues of around Rs 13,000 crore in 2016-17, it is expected to go up to Rs 18,000 crore to Rs 20,000 crore by 2019, officials said.
Similarly, in Andhra Pradesh, too, liquor revenues are going to be doubled in the next one-and-a-half years. AP Excise Minister Jawahar declined to specify the numbers, but told this newspaper on phone from Vijayawada that the election year would definitely see hike in government incomes. Presently, AP has around 4,300 retail liquor outlets and 800 bars, with total revenue around Rs 10,000 crore last year.
What brought cheers to the liquor and bar shops was the governments’ decision to bypass the recent Supreme Court order banning sale of alcohol within 500 meters distance from national highways. In both the states, around 25 to 30 stretches of highways passing through cities and towns have been de-notified as municipal highways, avoiding their displacement.