Punjab slashes liquor quota, brings in new licence policy

The Punjab government today slashed liquor quota in the range of 20-33 per cent even as the state targets a higher revenue of Rs 6,000 crore in the next fiscal, up by 16 per cent over estimated revenue in 2017-18.
The liquor prices are expected to drop by Rs 40-70 per bottle of country liquor, IMFL and beer as the financial burden on account of paying fee and other levies will drop because of introduction of the Minimum Guaranteed system, which will be launched for the first time in the state, officials said.
The Punjab cabinet today approved the new excise policy for the year 2018-19, with an aim of breaking the monopoly in the liquor business and keeping liquor prices under control, by slashing the Group size from Rs 40 crore to Rs 5 crore, thus increasing the number of Groups from the current 84 to around 700 in the next fiscal.

Allotment is proposed to be done through draw of lots to bring greater transparency under the new excise policy, which has been drawn out in consultation with various stakeholders and is focused on breaking the monopoly in the business, an official spokesman said.
"The government is hoping to earn Rs 6,000 crore during the next fiscal from the liquor business under the new excise policy, said an official spokesperson after the cabinet meeting.
For the current fiscal, the excise department expects to collect Rs 5,150 crore by the end of financial year, as against Rs 4,400 crore collected during 2016-17.

The Chief Minister directed the excise department to strictly monitor the policy implementation to ensure that there is no deviation in the collection of the projected revenues, according to the spokesperson.

The Group size, under the new Policy, has been kept very small - at Rs 5 crore only - with variation up to 25 per cent to enable sufficient competition in the market, leading to reduced prices, said the spokesperson.
Besides, to streamline the business, the number of liquor vends will be reduced from 5,850 to about 5,700, he further said.
Under the new policy, the quota of country liquor has been reduced from 8.44 crore proof litres (PLs) to 5.78 crore PLs, decreasing by 32 per cent.

Quota for Indian Made Foreign Liquor (IMFL) reduced from from 3.71 crore PL to 2.48 crore PLs which is 33 per cent less and of Beer from 3.22 crore BLs to 2.57 crore BL, 20 per cent less under the Minimum Guaranteed Quota.
"We want to discourage liquor consumption in the state," said finance minister Manpreet Badal.
"Each licence will be granted on a Minimum Guaranteed revenue basis, which will consist of fixed licence fee and excise duties/levies chargeable on minimum guaranteed quota.
The licensee will be liable to pay such minimum guaranteed revenue even if he does not lift the quota allocated to his licence. Settlement will be on monthly basis, which will also help in removing the supply of excess liquor to bootleggers," spokesman said.

The minimum quota for country liquor, IMFL and beer has been fixed at 70 per cent, 66 per cent and 80 per cent, official said adding that the licensee would have to pay charges and levies on minimum quota which may lead to reduction in prices of liquor.
The policy also provides that leftover excess quota of 2017-18 be carried forwarded in Minimum Guaranteed Quota of 2018-19, subject to payment of Excise Duty for 2018-19.
Under the provisions of the Policy, a fixed licence fee will be chargeable at the time of grant of licence. This will be fixed by the Collector-cum-DETC depending upon the quota of the Group and location of vends.

The rates of excise duty on Punjab medium liquor, IMFL and Beer have been fixed at Rs318 per PL, Rs 348 per PL and Rs 52 per BL respectively from wholesaler to retail stage.
Under the new Policy, the licensee can interchange upto five per cent of his quota from PML to IMFL and from IMFL to PML, as per requirement. Similarly, he can also get converted 10 per cent quota of PML to IMFL, subject to certain conditions.
On the suggestion of the Chief Minister, the cabinet decided to retain the ratio of Fixed:Open Quota of PML at 30:70 in order to encourage local distilleries from whom the licensed vends are obligated to pick up their quota.

However, excise incidence on all kinds of liquor has been suitably increased so as to secure government revenue and to prevent market prices from rising.
Abolition of 'Uchanti system' and charging of only minimum retail prices of liquor to retail licensee for functions to be held in marriage palaces/banquet halls are among the other features of the new policy.
Meanwhile, it has been proposed by the Excise & Taxation Department that instead of levying Cow Cess on per bottle basis in urban areas only (as has been done by some MCs), special license fee at the rate of Rs five per PL on PML and IMFL may be levied both in urban areas and rural areas so that equal rates of liquor are maintained in the market.

The fund so collected will be used for upkeep of Cows in urban areas. Similarly, the fund will be used for the welfare of livestock in rural areas along with on education and health services, Swachhta Abhiyan.