Apex liquor body cautions Jharkhand of regular change in its trade policy

Ranchi: The International Spirits and Wines Association of India (ISWAI), an apex body of premium alcohol and beverages, has urged Jharkhand government for a fair, transparent and robust business model in the state and warned that its alleged move to take over retail trade will not be successful citing failed attempts in the past. ISWAI stated in a statement that they are for the government’s support towards implementing “ease of doing business” and contributing in an equitable manner to the progress of the state.

“The financial year 2020-21 started with the onset of the COVID-19 pandemic and strict lockdown restrictions, which led to a contraction in economic activity. This created a situation where, on one hand, revenue collection of both centres and states suffered; on the other hand, there was increased expenditure on account of providing relief to the vulnerable sections and increasing public investment to boost the economy,” it said.

The situation was not much different in the state of Jharkhand. “According to the Excise and Prohibition Department of Jharkhand, the state has fallen short of the fiscal’s excise revenue targets of the last two years, mainly owing to the Covid-19 pandemic as mentioned in the meeting held in December 2021. In January 2022, the Jharkhand cabinet gave a nod to appoint the Chhattisgarh AlcoBev retail agency (CSBCL) for giving tips on increasing revenue from liquor sales. Further, there is speculation that the state government is contemplating a move to regulate the retail liquor trade by taking it over is to ensure fair play and plug leakages in revenue,” it said, adding that recurrent changes in liquor policy threatens to disrupt the industry.

“This is not the first time that the state government is mulling to change the alcobev retail business model. The state-owned Jharkhand State Beverages Corporation Limited (JSBCL) took over the liquor business, including wholesale and retail, from August 1, 2017. But there was a significant loss in government revenue. The government had to shift to the old system of auctioning it to private players, and after that, the department started getting more revenue,” it said. 

Nita Kapoor, CEO, ISWAI said in a note, “The covid has disrupted normal business across the sectors. Due to the covid restrictions in the state of Jharkhand and significant tax increases which incentivized stock inflow from neighbouring states leading to a decline in the alcobev business.”

Suresh Menon, secretary-general, ISWAI added, “The recurring changes in the alcobev retail model in Jharkhand have had their own set of challenges for the supply chain, and have a bearing on consumer choice and availability factor as well. The challenges faced during the earlier regime were denial of sale of known brands, the exponential growth of sale of little known brands, delay in the implementation of an online platform, lack of stock visibility in the retail and a non-transparent payment process. The industry is still facing the fallout of the earlier government-in-retail experiment by way of outstandings overdue for over 2 years.”

“For a sector that is a key source of the state’s own tax revenues post GST, such frequent changes in route-to-market (RTM) are undesirable and would convey an impression that the state government is operating by trial and error favourable image to have,” they added.