This comes as the first day of lockdown relaxation in Delhi saw long lines with customers breaking social distancing rules and a large number of people collected outside liquor stores
Analyst say that other states could also implement similar taxes in the coming days
New Delhi: The Aam Aadmi Party (AAP) led Delhi government on Monday announced a ‘special corona fee’ of 70% on the retail price of alcohol which will be applicable from Tuesday.
This comes as the first day of lockdown relaxation in Delhi saw long lines with customers breaking social distancing rules and a large number of people collected outside liquor stores. The union home ministry relaxed the lockdown rules from Monday which allowed standalone shops including those selling shops and tobacco.
Analyst say that other states could also implement similar taxes in the coming days. According to the Press Trust of India, Delhi’s neighbouring state Haryana is also mulling a special cess on alcohol.
The Delhi government order said that “70% of the maximum retail price on all categories of liquor sold through retail licensees for consumption “off" the premises."
Excise is a state subject and the tax on alcohol is one of the key sources of incomes for states.
The long lines led to police authorities shutting liquor stores in parts of Delhi including East Delhi. Liquor stores have been closed in Delhi for more than 45 days as India has been under a strict lockdown to control the spread of covid-19.
Earlier in the day, Delhi chief minister Arvind Kejriwal had warned that action will be taken against those who do not practise social distancing outside shops. He said that store owners will be responsible to impose social distancing measures.
“It was unfortunate that chaos was seen at some shops today in Delhi. If we come to know of violations on social distancing and other norms from any area, then we will have to seal the area and revoke the relaxations there," Kejriwal said while addressing a digital press conference.
Analyst point out that the move will have a negative impact on the volume of liquor consumption.
“This will be a big negative impact for volumes as on-premise volumes are already under pressure due to social distancing. I expect a hit in the premium, prestige and scotch brands due to affordability factor. Usually, this industry demand has been inelastic to duty hikes, but in the current scenario consumption will be impacted as a large number of people lose jobs and work on a lower income," Karan Taurani, research analyst at Elara Capital Ltd.
Taurani expects more states to follow suit in a staggered way. According to Taurani, Delhi market is almost 6-7% of volumes for whiskey.
Delhi has one of the highest number of positive cases of covid-19 in the country with almost 5000 cases and 64 deaths.
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