Sunil Jain: Hic hic hooray!

PERSPECTIVES

The government has high taxes on alcohol, says the NCAER's latest Macrotrak, to both raise revenue as well as dampen consumption of alcohol, but both objectives have been undermined by rampant tax evasion. NCAER's conclusion is based on a study of the industry it did sponsored by Diageo India Pvt Ltd, the owners of brands such as Johnnie Walker and Smirnoff. According to the study, the total production/consumption of liquor in India was around 7,677 million litres during 2005, a figure which implies that more than 71 per cent of consumption was not reflected in production statistics for the year. The study estimates the production/consumption of IMFL and country liquor is growing at around 12.6 per cent per annum while the official rate of growth is only 2.9 per cent. 
 

Estimate of Illegally Produced and Consumed IMFL and Country Liquor (Million Litres)
SPIRIT	1999	2000	2001	2002	2003	2004	2005	Avg Annual Growth Rate % P.a.
Alcohol Production	1,832	1,868	1,905	1,943	2,040	2,142	2,196	2.9
Estimates of Consumption	4,578	4,990	5,439	5,928	6,462	7,043	7,677	9.0
Discrepancy	2,746	3,122	3,533	3,985	4,421	4,901	5,482	12.6
Unaccounted Production in Total Alcohol consumption	60.0	62.6	65.0	67.2	68.4	69.6	71.4	-
Source: Derived from Indian Sugar Manufacturers' Association for sugar and molasses production data till 1997-98 and Committee on Development of Bio- Fuel, published by the Planning Commission, Government of India, and Trade Comment and Alcoholic Beverage Industries, NSSO consumption data.