ap-liquor-business-goof-up

The other day, Chief Minister Chandrababu Naidu reviewed the Excise Department. During the meeting, the officials mentioned to the CM how the liquor business is becoming untenable with just a 10.5% Margin.

The Chief Minister agreed to increase the margin up to 14%.

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However, this decision is strange. In the Tenders Circular, the Government clearly mentioned that the Retail Margin is going to be 20%.

Naturally, the bidders did their calculations on that basis and entered this business but the initial 10.5% margin rocked their boats completely.

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In fact, their profit margin came down below 10% as the government started imposing additional retail excise tax, a drug control/rehabilitation cess of 2 percent etc.

Now, the 14% margin may not help them much.

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It is interesting to note that the majority of people who filed applications for the Wine Shops lottery are the TDP and Janasena cadre.

The government managed a whopping sum of about ₹1,700 crore from those ₹2 lakh non-refundable deposits per shop for license applications.

The cadre themselves filed the majority of applications and a major chunk of this 1,700 Crore revenue is their.

Those who won the shops are also suffering due to less margin and a hefty annual retail excise tax (RET), which ranges from ₹50 lakh for small towns (with populations of around 10,000) to ₹85 lakh in larger cities (population 5 lakh+). And this tax will increase by 10% in the second year.

There are instances of many license holders surrendering their permits because the business was simply unviable. Those still running the businesses are bearing hefty losses.

If the Government makes the business viable, it will automatically end Belt Shops, Illegal Liquor, and Fake Liquor.

Also, the party cadres who entered this business trusting the Government can be saved as well.




The Government may have to face trouble if the License holders go to court about not honoring the 20% margin promised in the Tenders Circular.