(This story originally appeared in on Jun 22, 2019)
NEW DELHI: In the last one year, UP’s excise collection from liquor sale has gone up by 48%, from Rs 12,653 crore to Rs 18,706 crore, after UP chief minister Yogi Adityanath tweaked the state’s excise policy followed by his predecessors Mayawati and Akhilesh Yadav.
The government’s official auditor, Comptroller and Auditor General (CAG), has reviewed the excise policy between 2008 and 2019 and observed that major distilleries in UP were allowed to fix their own excessive prices for their brands of whiskey and beer leading to undue profiteering. The CAG report has been submitted to the state government for tabling in the next assembly session, sources said.
The auditor has compared the excessive charges on specific liquor brands, a big share of which went to the distilleries, as compared to the prices in neighbouring states of Rajasthan and Uttarakhand. For instance, a popular Rum brand that sold for Rs 310 in Rajasthan and Uttarakhand was sold for Rs 490 in UP during the regimes of Mayawati and Akhilesh between 2008-18. Similarly, a premium scotch whisky in UP was sold for Rs 1,570 as compared to Rs 1,310 in other states.
This also led to a decline of 39% in sale of Indian made foreign liquor (IMFL), from 12.20 crore bottles sold in 2011-12 to 7.5 crore bottles in 2015-16. Consumption of beer also declined during this period by 7%, down from sale of 27 crore bottles to 25 crore bottles.
“If the increase of Rs 6,052.74 crore achieved in the 10 months (April 2018-January 2019) period is extrapolated, the state had allowed the private distilleries/breweries to potentially earn undue profits in excess of Rs 7,263.28 crore in 2017-18 alone, and significantly more during the period 2001-18,” the auditor has observed in its report submitted to the state government.
The review of the excise policy from 2008-18 revealed that the then state governments had allowed private distilleries to fix ex-distillery price (EDP) and ex-brewery price (EBP) “leading to excess fixation of EDP/EBP of IMFL in UP”.
The audit looked into other irregularities in levy and collection of excise revenue. The test check of 13 distilleries and breweries revealed financial implication of such irregularities to the tune of more than Rs 24,800 crore. “The state government did not make any effort to arrest the decline in the sales of IMFL and investigate the root cause for such decline,” CAG noted.
The auditor’s test-check in comparison with the neighbouring states showed “undue benefits of Rs 7,168 crore” accrued to distilleries, breweries, wholesalers and retailer during 2008-18 while the consumers paid exorbitant prices and state exchequer lost major revenue.
“Determination of EDP/EBP is an important responsibility of the state excise department ensuring both the availability of liquor at reasonable prices and adequate revenue collection from liquor sale,” the auditor has noted.
In April 2018, a year after Yogi Adityanath led BJP took charge of the government, the state excise policy was tweaked, making it compulsory for the distilleries and breweries to charge prices similar to what was offered in neighbouring states. “The policy intervention led to sharp increase in the excise revenue by 47.84% (from Rs 12,652.87 crore to Rs 18,705.61 crore) during April 2018 to January 2019 compared to the same period in the previous year,” the auditor has said in its report.