Bihar: 45,000 villages lose liquor access

Bihar State Beverages Corporation Limited (BSBCL) would now be both wholesaler and retailer resulting in a 17% increase in commission, which would shore up excise revenue and cut shortfall steeply. The impact on revenue is low.

Forty five thousand villages of Bihar lost proximate liquor vends opened between 2007 and 2014 to augment state revenue, with the partial liquor ban effected on Friday.

Forty five thousand villages of Bihar lost proximate liquor vends opened between 2007 and 2014 to augment state revenue with the partial liquor ban from Friday. (HT Photo)

But a close look at the financial dynamics of the partial ban on liquor gives the impression that the state would not be poorer as believed and the loss in actual terms would not be over Rs 1,200 to Rs 1,500 crore.

Reason: One, the state will continue to sell IMFL (Indian Made foreign liquor) in urban limits from government controlled shops having MGQ (minimum guarantee quantity) as in previous years. This means, stocks in shops for beer or hard liquor would not come down even though vendor-outlets come down from 6000 to 655. There still would be room for higher consumption.

Another factor, which would propel revenue is government’s bid to make BSBCL (Bihar State Beverages Corporation Limited) change its role from wholesaler to retailer. This would fetch the BSBCL 15% in commission, which was till now transferred to the private retailers. In addition, BSBCL would get 2% commission on liquor for being the wholesaler.

In Patna division, beer MGQ is highest among divisions standing at 22148260 BL (bulk litre) with Patna alone having a MGQ of 13269899 for 136 shops.

IMFL MGQ in Patna district stands at 896058 LPL (London proof litre), which is a bit lower than Gaya division with 1040673 LPL. Kosi division-one of the poorest regions of the state-has the lowest MGQ both for beer and IMFL.

“We expect to earn good revenue from 17% of commission on liquor. That would make up for losses from country liquor in some ways as profit margin would go up,” said an officer in BSBCL. Hike in price IMFL and beer brands could fetch more revenue for the state kitty from excise.

If one takes the revenue figures of 2014-15, the state earned Rs 888 crore from country liquor, including VAT, whereas revenue from IMFL was Rs 2,500 crore (including VAT) .

That means, the state could look to earning Rs 2,000-2,200 crore from IMFL as sale of hard liquor is expected to be high in urban areas where shops would have big stocks to meet demand, including numbers flocking from rural areas.

“So far the state has not been in to liquor retailing. It’s a new area but we expect revenue stability since demand does not subside,” said, another officer.

It’s a different matter, the state is not focusing on revenue. Chief minister Nitish Kumar has asserted that he would impose complete ban on liquor by next year to fulfill his promise of total prohibition to improve the quality of health of state’s 11 crore population and check social ills like domestic violence and family break-ups due to alcoholism.