Bengaluru: In a move that could spell trouble for tipplers, the government has been quietly devising plans to hike the prices of cheap liquor, awaiting implementation post the Lok Sabha elections.
One of the challenges faced by the government is generating funds for the five guarantee schemes. In its efforts to bolster financial resources for these schemes, the government has set its sights on increasing the prices of domestic liquor (IML).
Karnataka boasts notably low prices for many brands of cheap liquor compared to neighboring states like Tamil Nadu, Andhra Pradesh, Telangana, Maharashtra, and Kerala. This disparity has led to a surge in the sale of cheap liquor within the state, contributing significantly to the revenue flowing into government coffers from the excise department.
Liquor brands in Karnataka are categorised into 18 bands based on price. The first five bands account for 75 per cent of the income from liquor sales, semi-premium liquors from the 6th to 12th bands contribute 20per cent, while premium foreign liquors from the 13th to 18th bands contribute per cent. In a bid to boost revenue, the government plans to hike prices by 100 per cent for liquors in the second to fifth bands, resulting in an expected increase of 7 to 8 per cent.
While the price of domestic liquor was last increased in July 2023, no revisions have been made since then. However, the government, as per its budget announcement, intends to align liquor prices in Karnataka with those in neighboring states after the Lok Sabha elections.
To this end, the government plans to adjust prices based on the average rates prevailing in other states. Prices for cheaper liquor brands are set to increase, while those for more expensive brands will see reductions to align with rates elsewhere. Semi-premium liquors may see a reduction of 10 per cent, while prices for premium foreign brands could decrease by 12 to 15 per cent.
In a related development, the Congress government, which came into power after the 2023 assembly elections, has already raised beer prices thrice. Initially, an additional duty of 20 per cent was imposed, followed by a hike in Additional Excise Duty (AED) from 185 to 195 percent. This resulted in a subsequent increase in beer prices by Rs 8 to Rs 15 per bottle, affecting all brands from common to premium varieties. Over the past seven to eight months, beer prices have surged by approximately Rs 40 per bottle across the board.
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