E-Paper
Andhra Pradesh: Opposition slams government for ‘diluting’ liquor policy
“Though the Andhra Pradesh government proposed to raise ₹2,000 crore through the bonds, the offer got an overwhelming response with five times oversubscription. The government accepted the subscriptions up to ₹8,300 crore,” an official in the APSBCL said, adding that the base interest rate for the NCDs would be 9.5 per cent.
The Andhra Pradesh government’s latest move to raise ₹8,300 crore by floating liquor bonds has kicked up a political row, with opposition parties slamming the ruling YSR Congress Party (YSRCP) for going back on its pre-election promise of implementing total prohibition in a phased manner.
On Friday, the state government issued non-convertible debentures (NCDs) in the open market through Andhra Pradesh State Beverages Corporation (APSBCL), to mobilise funds required for the implementation of the welfare schemes.
“Though the state government proposed to raise ₹2,000 crore through the bonds, the offer got an overwhelming response with five times oversubscription. The government accepted the subscriptions up to ₹8,300 crore,” an official in the APSBCL said, adding that the base interest rate for the NCDs would be 9.5 per cent.
The process for floating bonds had begun in April this year when India Ratings and Research (Ind-Ra) made an assessment of the state government’s offer of NCDs and gave a provisional “AA” (stable) rating. The final rating would be given within 90 days of the date of issuance of the bonds, the official said.
According to the Ind-Ra document, the government has committed to transfer the net revenue from liquor, comprising the basic price of liquor, APSBCL’s retail margin, commissions and special margin daily to a designated net revenue receipt account of the corporation.
A pre-defined amount from this account will be transferred daily to APSBCL’s bond servicing escrow account on a priority basis. The interest servicing and repayment of the bonds will be made from the build-up of operating cash flows, through daily transfers, in the escrow account.
The document noted that the state government’s revenue from liquor increased from ₹9,000 crore in 2019-20 to ₹18,047 crore in 2020-21 and it went up to ₹19,500 crore in 2021-22.
Since September 2019, the liquor trade in the state was taken over by the APSBCL. An ordinance was passed on February 28, 2022, to enable the corporation to collect the special margin prescribed by the state government, with retrospective effect from November 21.
The rating agency expects the revenue from operations to increase in the near- to medium-term, due to the collection of special margins.
Interestingly, the document said the state government had committed to the buyers of the bonds that it would not impose a total or partial prohibition on alcoholic beverages. “If the government prohibits the sale and consumption of liquor, it will ensure premature redemption of all outstanding bonds within three months from the date of such an imposition,” it said.
Telugu Desam Party (TDP) general secretary Nara Lokesh, on Sunday, accused chief minister Y S Jagan Mohan Reddy of turning Andhra Pradesh into ‘Sampoorna Madyapaana Pradesh’ (complete liquor state).
“Jagan has raised fresh loans of ₹ 8,300 crore from the market by mortgaging the liquor consumers. What happened to his pre-election promise of implementing prohibition in a phased manner?” he asked.
Lokesh said the chief minister’s betrayal of liquor policy was enough to say how treacherous the YSRC rule had been in the past three years. “He made a total reversal by giving it in writing that his government would not implement the total prohibition policy,” he said.
Bharatiya Janata Party (BJP) spokesman Lanka Dinakar said Jagan took a complete U-turn on his prohibition policy. “Before elections, he said liquor was ruining the lives of families in the state and promised to implement total prohibition. The same liquor has become the main source of revenue to the state, and now, it is fetching more loans to the government,” he said.
Jana Sena Party (JSP) president and actor Pawan Kalyan, in a tweet, criticised that the government, which had once made a tall claim on implementation of total prohibition in the state, was depending totally on liquor revenue. “The ruling party leaders own distilleries and breweries; so, additional income to them,” he said. Quoting a Bible verse, he said: “Lying lips are an abomination to the LORD, but those who act faithfully are his delight.”
Rebel YSRCP parliamentarian K Raghu Ramakrishna Raju also found fault with the Jagan government for raising loans through liquor bonds. “What will the chief minister say for going back on his prohibition policy?” he asked.
However, senior YSRC legislator and former chief whip G Srikanth Reddy defended the government’s decision to float liquor bonds. “We have gone in for market borrowing only to raise money for implementing welfare schemes. What is wrong in raising loans on the present excise revenue for people’s welfare?” he asked.
He further said that the YSRCP had never claimed that it would implement total prohibition at one go. “We only said we shall implement it in a phased manner, and we are committed to it. We have done away with the unauthorised liquor shops and reduced the number of wine shops and bars in the last three years,” Reddy said.
