Plenty of beer in Karnataka, says minister

Karnataka seems more concerned about indulging its tipplers than most other states; particularly Maharashtra. The state's excise minister M P Renukacharya on Tuesday made an official statement that the beer shortage in Karnataka, which followed a 7.5-per cent hike in additional excise duty, has ended.

A few days ago, there was temporary disruption in production and supply because of the required change in labelling to indicate the higher price. An associated reason for the supply shortage was hoarding of beer and liquor by shopkeepers to sell at higher prices after 1 April, when the new rates took effect.

In his maiden budget presented to the state Assembly last month, Chief Minister D V Sadananda Gowda increased the duty across the board for Indian-made spirits (officially known by the oxymoronic term Indian-made foreign liquor or IMFL), as well as beverages with low alcoholic content, from 2.5 per cent to 10 per cent.

According to figures from the Karnataka State Beverages Corp Ltd, 2.13 crore litres of beer were sold in March 2012 as opposed to 1.3 crore litres in February. The considerable hike in sales can of course be partly attributed to the onset of the Indian summer; but it also indicates that unlike Mumbai or Maharashtra consumers, those in Bangalore or Karnataka can still afford to drink beer on a regular basis.

According to KSBCL's daily data sheet, sales of beer totalled over 1.4 lakh cases on the last day of March. Out of this, Bangalore accounted for 39,493 cases (around 27 per cent).

KSBCL made revenues of Rs13,700 crore in 2011-12, out of which IMFL and beer accounted for Rs12,733 crore and spirits for over Rs 900 crore.

The rise in revenue from spirits and beer is also due to the low taxes in Karnataka – unlike Maharashtra, where taxes were hiked by as much as 60 per cent last year in a short-sighted effort to increase revenues. As a result Maharashtra has succeeded in killing the goose that lays the golden eggs; revenue from liquor sales is sinking rapidly.

Numerous reports indicate that beer bars and 'permit rooms', once one of the 'high' points of Mumbai, are shutting down by the dozen; as apart from hiking taxes on such establishments, the Maharashtra government has made alcohol-containing drinks prohibitive for the average consumer who could earlier have his or her evening tipple in a bar with colleagues after a hard day's work.
The Delhi government was smart enough a few years back to reduce duties on beer and other low-alcohol drinks while retaining higher taxes on spirits - which is the international practice to reduce drunkenness. But Maharashtra obviously does not realise that it is killing a milk cow.