news Thursday, May 07, 2015 - 05:30
As Andhra Pradesh faces a financial crunch and needs revenue to build an entirely new capital city, Chief Minister Nara Chandrababu Naidu is attempting to pull out the same old rabbit from his new hat: income from the liquor sector. With licenses set to expire for over 4,000 liquor shops in the state on June 30, the state government is looking to revise its liquor policy and possibly take over the entire sector eventually.  Confirming the proposal to The News Minute, the Communication Advisor to the CM, Parakala Prabhakar, says, “Yes, there is a proposal on paper but no decisions have been taken. We are studying the models of Kerala, Tamil Nadu and Delhi to see what could work best for us.”  Andhra Pradesh (AP) excise minister Kollu Ravindra is visiting Kerala, Tamil Nadu, Karnataka and Delhi with officials to study their respective policies. Raking in cash from the sale of alcohol to fill in the coffers of the state is not new for CM Naidu. In 1997, after he took over as the CM of united AP for the first time, he reversed the alcohol-prohibition policy which had been implemented by his father-in-law and former CM NT Rama Rao in 1995.  Naidu had argued in 1997 that the sector could fetch more that Rs 3,000 crore per annum then. Ironically, prohibition was one of the election promises which got NT Rama Rao elected to power earlier. According to Prabhakar, there are three main reasons behind the proposal. Firstly, AP is looking to increase its revenue base. It is estimated that while the state could earn around Rs 50 lakh per shop through licensing, it could earn more than a crore from each shop in one year if the state took over the business. The second goal, says Prabhakar, is to crack down on the practice of “belt shops”. Over the years, a particular strategy by liquor syndicates to manipulate demand and raise the price of alcohol has become rampant. The liquor mafia creates an artificial scarcity of alcohol and diverts stocks to illegal shops which sell the same alcohol at a premium. There have also been reports of alcohol in these stores being adulterated, but desperate tipplers buy it anyway. The AP government hopes to shut down this practice by taking over the industry. Thirdly, the state wants to promote the safe consumption of alcohol and believes that it will be able to do so only with more control. For instance, Prabhakar says, that liquor shops near highways will be shut to reduce drunken driving. As expected, the liquor lobby in the state is not happy. Rayala Subba Rao, president of AP Wine Dealers' Association is fighting the government's move claiming it would do more harm than good. "The state is right when it says that the government-run liquor trade would fetch more revenue. But whose pocket will that revenue go to?” he asks, “This move will definitely lead to more corruption.” Rao says that this move would result in politicians with vested interests promoting their brands and creating monopolies. Rao also believes that the state’s proposal would only lead to more “belt shops”. "Illegal belt shops will return. AP recently managed to curb them and this might help them get back," Rao adds. The government is also facing opposition from within, with some politicians of the TDP too against the move. However, the politicians refused to comment on the issue when TNM spoke to them. The experience of state-owned alcohol in Kerala and Tamil Nadu is not very inspiring. While it has indeed contributed to revenues, alcoholism has been on the rise in both states. Even in Karnataka, partial control of the business by the state has resulted in the increase of alcohol consumption. But Prabhakar dismisses the possibility, “We will do nothing which will increase the consumption of alcohol in the state,” he says. Even so, the state has a mammoth task ahead of it. The government is likely to select one district to set up a pilot project and iron out inefficiencies before going for a state-wide takeover. The AP government might also start with the Karnataka model, in which government owns and around 20% of the retail liquor shops and rest of the market is given away to private agencies.