Severe drought situation in the state has taken a toll on collection of excise duty across the state including Nagpur. The liquor consumption has remarkably gone down owing to poor state of finance across rural Nagpur.
The excise department, the third highest contributor to the state’s kitty after sales tax and stamp duty and registration departments, collected just Rs12,450 crore in revenue. The targeted amount was Rs13,500 crore.
Senior officials said the Rs1,000 crore shortfall was because of factors such as drought, which have affected the consumption of liquor in rural areas. The imposition of prohibition in Chandrapur district has also had an impact, as the district has a vast labour base and accounted for around Rs500 crore in revenue.
Incidentally in 2014-15 as well, the state excise department had marginally fallen short of its Rs11,500 crore target, with collections at just Rs11,397 crore.
In the 2015-16 financial year, the original target of Rs13,500 crore was revised upwards to Rs13,699.90 crore. This year, the department has to raise Rs15,343.86 crore in excise duties.
“The fall in excise revenue also affects the sales tax collection, as a 25% value added tax (VAT) is levied on liquor,” the official pointed out. He added the decision to impose prohibition in Chandrapur has led to similar demands from other districts, which has made potential liquor retail licensees and applicants wary. This has led to lower collections towards permits and license fees.
The official said preliminary estimates suggested that sale of country liquor had shown a de-growth of 5.5% for the year ending March 31, 2016. Though consumption of wine, which is exempted from payment of excise duty, has risen by around 10%, the growth in IMFL (7.5%) and beer (4.3%) sales was tepid.
Country liquor, which is cheaper and consumed by the masses, generally sees highest sales in terms of volume. It is meant to provide a safe and cheap alternative for drinkers and keep them away from consuming harmful illicit liquor and hooch.
The official said with excise duty on country liquor being increased in 2015-16, there was a possibility that its consumers were shifting to illicit hooch or liquor smuggled from other states.
The department has fallen short of its collection targets in districts including Jalna, Parbhani, Beed, Hingoli, Latur, Amravati, Akola, Bhandara and Ratnagiri, though collections are healthy in Mumbai city and its suburbs, Thane, Nashik, Solapur, Nanded, Osmanabad, Nagpur, Kolhapur, Pune and Buldhana.
Apart from Chandrapur, the districts of Wardha and Gadchiroli are also under prohibition. Prohibition was imposed in 1975 in Wardha, where Mahatma Gandhi’s Sevagram ashram is located. Naxalite violence-affected and tribal-dominated Gadchiroli went dry in 1992.
Maharashtra follows a policy of discouraging liquor consumption through high prices and low sales and has one of the highest excise duty regimes in India. This leads to the brew being smuggled in from neighbouring states, which have lower duties.