Ban on liquor hits states' revenue amid COVID-19 lockdown; here're some interesting facts

New Delhi: After 40 days of strict lockdown to contain the spread of coronavirus COVID-19 pandemic, the Ministry of Home Affairs (MHA) through it fresh guidelines has permitted the government-run liquor shops to open with certain conditions but people across the country were seen flouting the social distancing norms on the very first day of the relaxation.

The liquor shops became the most visited places on the first day. About 150 government-run liquor shops were allowed to open in the national capital in accordance with the lockdown norms, while reports from Karnataka stated that the state earned about Rs 45 crore from the liquor sales on the first day.
 
These reports show the economic relevance of liquor trade for states and the reason they were putting pressure on the Centre to allow these shops to open amid ongoing COVID-19 lockdown. The Centre had prohibited the sale of liquor in the wake of COVID-19 lockdown on March 24, causing a revenue loss of Rs 30,000 crore for states in the past month and a half.

The ban on liquor sales across the board is hitting the government to the tune of Rs 700 crore a day in terms of loss of revenue, according to industry representatives. 

In the financial year 2019-20, different states budgeted for Rs 1.70 lakh crore through tax on sale of liquor. The taxes from liquor sale accounted for 15-25% of the state's own tax revenue.

In states like Uttar Pradesh, Karnataka and Uttarakhand, tax from liquor sale accounted for over 20% of their tax revenue, while the income of state excise in West Bengal, Chhattisgarh, Himachal Pradesh, Punjab and Telangana comprised 15-20% of the states' tax revenue.

However, excise tax on liquor in Kerala, Maharashtra and Tamil Nadu accounted for less than 10% of these states' total collection of tax revenue. 

The overall proportion of taxes from liquor sale in states' total tax revenue come to single-digit primarily because bigger states like Maharashtra and Tamil Nadu get lower tax collection from the sale of liquor while Gujarat and Bihar earn no revenue due to a ban on liquor in their territory.

Delhi, a Union Territory with higher than national per capita income, earns over Rs 5,000 crore annually from liquor sales. Karnataka too earned Rs 21,400 crore from liquor sales in 2019.

These states were hit hard

1. Maharashtra: The state government has announced that shops selling non-essential commodities, including liquor, will be allowed to open in the non-containment zones in the state but it will allowed only in standalone shops with social distancing norms. The sale of alcohol, however, will not be allowed in five districts of Maharashtra including Solapur, Aurangabad, Jalna, Buldhana and Amravati.

2. Delhi: The AAP-led government has allowed the opening of abound 150 liquor shops in the capital. These state-run liquor shops will operate from 9 am to 6.30 pm. The government has directed to deploy marshals at these outlets to maintain social distancing norms. 

3. Uttar Pradesh: The liquor shops, which are not located in shopping malls, can be opened from 10 am to 7 pm with social distancing norms to ensure that not over five persons are there at a time, an official said. The state government clarified that alcohol sale will not be permitted at hotels and restaurants.

4. West Bengal has allowed the opening of liquor shops only in the green zones, stating that it will not allow liquor shops to reopen in the red zones and has so far not decided on those shops located in the orange zones.

5. Chhattisgarh government has also allowed reopening of liquor shops in non-restricted areas from May 4, from 8 am to 7 pm. The state excise department has also planned to start home delivery of alcohol at some places to discourage the crowd at wine shops.

6. Karnataka: Excise Commissioner in the state has ordered that only retail shops and state-run retail shops like Mysore Sales International Limited will open from May 4, between 9 am and 7 pm in the areas that are outside containment zones. Barricades have also been erected to ensure that people stand in line and boxes or circles drawn in front of shops to maintain social distancing.

7. Assam government has allowed the reopening of liquor outlets across the state. Earlier, the state government allowed the sale of liquor from April 12 but had to stop it after three days following a directive from the Centre.

8. Himachal Pradesh government has allowed liquor shops to operate from May 4, but will shy away from charging any licence fee from liquor vends for the period (March 22 to May 3) as they remained closed due to coronavirus lockdown.

9. Kerala has not allowed the opening of liquor shops as CM Vijayan had earlier made it clear that liquor shops, malls, beauty parlours and barbershops will continue to remain shut in the state.

10. Punjab government has allowed the opening of liquor shops in a staggered way on rotation for four hours every morning after May 3, otherwise, the sale of liquor will continue to be prohibited.

11. Meghalaya has also allowed the opening of liquor shops partially.

12. Haryana: Alcohol shops in Haryana remained shut because the shopkeepers denied buying the quota of alcohol bottles and the payment of licence fee.

13. Andhra Pradesh government has also allowed the sale of liquor with a 25 per cent hike in prices.

14. Goa government has made wearing of masks mandatory to those who go to buy alcohol from retail and wholesale stores in the state.

Liquor ban in these states 

1. Mizoram: The Mizoram Liquor (Prohibition) Bill, 2019 was passed unanimously in the state assembly on March 20. The bill, that received Governor Jagdish Mukhi's assent before the Parliamentary elections, replacing the four-year-old Mizoram Liquor (Prohibition and Control) or MLPC Act, 2014

2. Gujarat is the only Indian state with a death penalty for the manufacturing and sale of homemade liquor that causes fatalities. The legislation is titled the Bombay Prohibition (Gujarat Amendment) Bill, 2009.

3. Bihar became a dry state in 2015 when the then Chief Minister Nitish Kumar prohibited the sale of alcohol across the state.

4. Nagaland became a dry state in 1989 when the Nagaland Liquor Total Prohibition Act (NLTP) put a ban on the sale and consumption of alcohol.

5. Lakshadweep is the only Union Territory in India to have put a ban on the sale and consumption of alcohol. Except for the island of Bangaram, which is an inhabited island with a bar, alcohol is banned in the rest of Lakshadweep.