Delhi set to lose 645 crore in revenue as liquor shops remained shut for 43 days

Hindustan Times, New Delhi | By, New Delhi
May 05, 2020 04:30 AM IST

In terms of income, alcohol accounts for around 14.1% of the Delhi government’s total revenue projections for 2020-21.

The national lockdown since March 25 to prevent the spread of the coronavirus disease (Covid-19) led to Delhi government losing around 645 crore in revenue from the sale of alcohol, when calculated on the basis of revised estimates in the 2019-20 state budget, senior government officials said Monday.

People seen outside a shuttered liquor shop during Covid-19 lockdown at New Bus adda in Ghaziabad on Monday.(Sakib Ali/HT File Photo)
People seen outside a shuttered liquor shop during Covid-19 lockdown at New Bus adda in Ghaziabad on Monday.(Sakib Ali/HT File Photo)

They adding that the excise department was preparing a full report on the exact revenue loss incurred by the ban on the sale of liquor for over 40 days.

In terms of income, alcohol accounts for around 14.1% of the city government’s total revenue projections for 2020-21.

For 2020-21, the city-state projected a total revenue of around 6,279 crore through the sale of liquor, compared to the revised estimate of around 5,480 crore for the previous fiscal. In 2018-19, Delhi earned around 5,007 crore through the sale of liquor, according to budget documents.

These figures highlight the importance to the state government of liquor sales in the Capital.

“The revenue loss during the lockdown has been estimated on the basis of 2019-20 revised budget estimates because the lockdown was already in place when we stepped into fiscal 2020-21. So, the projected revenue for this period made less sense when it came to taking a base figure,” one of the officials cited above said on condition of anonymity.

With the conditional scaling down of lockdown restrictions in non-containment zones, 150 liquor shops returned to business in Delhi after 43 days. These shops are under the direct control of the government and have L-6 and L-8 licences, which allow them to sell India-made foreign liquor (IMFL) and country liquor.

“In case there is a demand for imported liquor in a certain area, the L-6 shops are allowed to maintain limited stock of foreign liquor with permission of the excise department. Other than that, foreign liquor is formally covered under L-10 license category, which can be availed by both government departments or private enterprises. But there is hardly any L-10 license shop in the city which is not located in a market, mall or other public space that comes under the ambit of restrictions.”

An excise department officer who asked not to be named said that the city has 864 licensed liquor shops, which includes 389 shops owned by private individuals.

A senior government official said, the government collects taxes from both type of shops and the tax component depends on the brand of liquor in question. For any given brand, the tax component is the same in a private shop or a government shop. Private shops have to pay higher license renewal fee, but that doesn’t affect the retail price, tax component and margin for any brand.

Of the 475 shops owned by the government, only 150 qualify as “stand-alone” shops (not located in markets or malls) that operate with L-6 and L-8 licences.

Apart from these, the revenue from 884 bars and restaurants that serve liquor also contribute significantly to the government exchequer.

These continue to remain closed, said third government official, adding: “When it comes to opening 150 shops, they may witness higher than average sales. But these shops can open only between 9am and 6.30pm till May 17. So, it is difficult to estimate the numbers or the revenue gain at this juncture.”

Liquor shops in Delhi were last open on March 21. March 22 was a dry day because of the “janta curfew” call given by Prime Minister Narendra Modi, and the shops were shut for the two days owing to an order by chief minister Arvind Kejriwal. On March 25, the nationwide lockdown kicked in.

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