Financial Express
 
Bangalore, Jan 15:  The Karnataka government has decided to introduce major reforms in the liquor sector from the next fiscal. The government is chalking out plans to ban the manufacture and sale of arrack from the next excise year, starting July 2007.

The current revenue through arrack sales in the state shot up to Rs 163 crore per month from Rs 73 crore in 2004, while consumption rose to 1.5 crore litres per month from 75 lakh litres, after reducing excise duty to Rs 2 from Rs 20 per litre.

The excise department had offered licences to 18 primary distillers to produce arrack to distribute to 15,248 retail outlets in 176 talukas across the state. The government collected Rs 3,414 crore as excise revenue through arrack and Indian Made Foreign Liquor (IMFL) trade in the last fiscal.

Arrack plays a major role and contributes 60% to the excise revenue. If the state imposes a ban on arrack from the next excise year, it is likely to lose Rs 1,800 crore to Rs 1,900 crore per year in excise revenue.

Deputy chief minister-cum-finance minister, BS Yediyurappa, said the government would ban arrack as many families in rural Karnataka were suffering due to alcoholism among male members.

While the deputy chief minister’s announcement was a blow to arrack barons, it received accolades in rural areas. The Stree Sakti Group, non-government organisations as well as various Hindu Mutt heads, who have a strong sway on state politics, have been conducting anti-liquor campaigns in recent years. It is expected that the government would open up the issue of banning arrack for a debate in the forthcoming Assembly session.

After the Janata Dal (Secular)-Bharatiya Janata Party formed a new coalition government 10 months ago, finance minister Yediyurappa initiated reforms in the liquor sector. As a first step,the Karnataka State Beverages Corporation Ltd has started supplying IMFL directly to retailers and has not renewed licences of wholesale dealers who were gaining around 5% commission. The abolition of distribution thro-ugh private wholesale dealers is expected to hike excise revenue by Rs 150 crore this fiscal.