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A large part of state governed revenues come from the sale of alcohol. Photo: Mint
A large part of state governed revenues come from the sale of alcohol. Photo: Mint

In lockdown, states break the taboo around alcohol

  • It is very clear and simple that the states are looking at alcohol to harness its revenue potential and taxes on liquor are an important source

NEW DELHI: Before lockdown, 29-year-old Arman Malik never thought he could block a time to buy his preferred bottle of alcohol from the neighborhood liquor store in Delhi. His friends in Mumbai, meanwhile, opt for home delivery of alcohol.

In Ranchi, Jharkhand, delivery of alcohol is allowed through applications like Zomato and Swiggy.

The Communist Party of India (Marxist) or CPM-led Kerala government has launched an app 'BevQ' through which customers can get e-tokens for liquor purchase. A similar website has been launched by the Aam Aadmi Party or AAP- led Delhi government for e-tokens so that the rush at liquor vendors can be avoided.

The sale of alcohol is a focus area for state governments to earn revenue. The taboo associated with alcohol seems to have faded as states go out of their way to allow home delivery of liquor, and launch special apps and websites to make its access easier.

“The website has its glitches but it makes it so simple. So far alcohol has been a taboo subject which no government acknowledging it. Such steps by the government are welcome to ease the purchase of alcohol," Malik said.

India has been under a lockdown since 24 March. The sale of alcohol was banned in the first two phases until 3 May. The subsequent opening of stores saw jostling crowds at liquor shops flouting social distancing norms. Keeping the safety issues in mind, state governments had to mull changes for the sale of alcohol.

The value added tax (VAT) on alcohol is a key source of income for state governments. Since the imposition of the Goods and Services Tax, the VAT on alcohol remains with states. After the opening of stores at least 11 states --Delhi, Assam, Meghalaya, Karnataka, Andhra Pradesh, Telangana, Uttar Pradesh, Haryana, Rajasthan, Tamil Nadu and West Bengal -- have imposed special corona cess on alcohol.

Political analyst say it is very clear and simple that the states are looking at alcohol to harness its revenue potential and taxes on liquor are an important source.

“The state governments have made a very spirited defence of alcohol. The reasons are very obvious. A large part of state governed revenues come from the sale of alcohol, the tax they receive on the sale. The high level of resources that flow to the state on account of the consumption of alcohol, governments bent over backwards to be able to ease the flow of liquor in their states so that the sale, consumption would resume and state governments would have greater flow of resources," Sandeep Shastri, a political analyst and pro vice-chancellor of Jain University, Bengaluru.

He said in the past, increased taxes on items like cigarettes has led to the thinking that people will be discouraged but the opposite happened.

“Every time there is a budget, the taxes on cigarettes go up while some come up with the logic that people will be discouraged but I am not sure that logic holds true. The government realises that this is not a consumption that will reduce simply by the imposition of taxes. Whether it is taxed, highly or not – the consumption continues. The government is not seeking to play a moral role and is being much more prudent keeping its resource position in mind," he said.

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