Odisha dealers oppose e-auction of liquor shops

The recent cabinet approval for introducing online auction of liquor shops to bring in transparency and increase revenue in the beverage business has been opposed by the liquor dealers in the state.

Dealers fear, the e-auctioning of liquor licence will lead to speculative bidding and unhealthy competitions.

The state has decided to go ahead with the e-auctioning proposal despite submission of reports by its excise officials highlighting the poor experience of other states which had adopted such a system in the past.

The state government last year had sent three deputy excise commissioner rank officials to Andhra Pradesh, Tamil Nadu and Karnataka to study the e-auction system in practice there and report back their findings.

In the report, the then Deputy Commissioner (CD), Excise, DK Nag had pointed out that the liquor shops under the auction system continued to be settled on high prices through speculative offers and resulted in formation of syndicates and sell of liquor above maximum retail price (MRP).

Nag also mentioned that auction sale of liquor shops had given rise to a scam of Rs 7,000 crore in Andhra Pradesh leading to detention of many officers behind bars. This has compelled the Andhra government to revert to settlement of shops through fixed free system by draw of lots from 2012-13.

Similarly, the other officials who visited Tamil Nadu and Karnataka remarked that adoption of auction system will result in artificial bidding and formation of syndicates.

The liquor dealers also feared that the base price for auction of liquor licence may go up by as much as thirty per cent compared to the fee charged for licences now. This will result in additional burden of higher minimum guaranteed quota (MGQ) which is fixed in proportion to the licence fee.

"With the market heading towards saturation, the operation will be unsustainable in the new format," said a member of Khurda District Liquor Dealers Association.

He complained that the auctioning will open the doors for big and unscrupulous players from other states and push the local vendors out of business.

As many as 30 cases have been filed in the Odisha High Court challenging the proposed e-auction system.

The last allotment of country and foreign liquor shop licences, through the prevalent lottery system, had taken place in 2005 and every year these were getting renewed with average 10 percent increase in the licence fee. There are about 1,131 Indian Made Foreign Liquor (IMFL) and more than 500 country liquor shops in the state.

Odisha government had collected Rs 1,380 crore revenue from the excise sector during 2011-12 and aims to increase it to Rs 1,700 crore during the current fiscal.