Karnataka wants you to drink more liquor, less beer

Wondered why the waiter at your favourite restaurant said “sorry , we have run out of beer” and looked sheepish when you asked “how come?” Here’s the answer: Excise authorities are forcing restaurants and liquor shops to procure higher amounts of Indian-made foreign liquor (IML) by restricting supply of beer.

Duty on liquor is one of the biggest revenue-earners for the state government. IML sales registered a 15.89% increase in 2013-14 but dropped by 7.58% in 2014-15. As the expected revenues did not flow in, there is apparently “pressure from the government” to get excise licence holders to sell more IML.
“If we procure 50 litres of IMFL, they give us just 10 litres of beer as the tax levied on IML is more,” said Ashish Kothare, head of the Bengaluru chapter of the National Restaurant Association of India.

Nagesh Babu, member of Federation of Wine Merchants’ Association of Karnataka, said officials harass liquor shop owners. “They never give us what we ask for.The duty on beer is less. The government generates revenue from IML the same day it is dispatched from the warehouse,” he said.

Karnataka State Beverages Corporation (KSBCL), comprising employees from the excise department, is the sole regulator and distributor of liquor in the state. The excise department is concerned with meeting revenue targets. For bars and liquor shops, it translates into dissatisfied customers. “More IML means we have to force customers to consume this over beer. Alcohol content is more in IMFL. It is more harmful than beer,”

Kothare said.”Most youngsters prefer beer to other drinks. We are losing business because of this,” said the owner of a bar on Brigade Road, who did not want to be named. “The Excise Department thinks we are making huge money by running a bar and restaurant, which is untrue. Earlier, the department used to force us to take more stocks. Now, they are forcing us to sell more IML.”The Karnataka State Temperance Board has hit out against the Excise Department. “On the one hand, we are trying to get people to quit alcohol. The Excise Department is forc ing people to consume liquor. This is bad. Who are they to decide what people should drink,” Board chairman MR Rangashamaiah asked.

Excise Commissioner SR Umashankar initially admitted to the existence of the practice.

“In summer, most liquor shops pur chase only beer because of the incentives offered by beer companies. As a result, there was imbalance in sales and our officials are trying to balance IML and beer.” Holding that the department will not put a cap henceforth, he said, “In case of any deviation, licence holders can approach me directly .”
Principal Secretary (Finance) ISN Prasad, who also chairs the Karnataka State Beverages Corporation Limited, said he was not aware of the issue.