State to lower licence fee, target more liquor sales New liquor policy

To rationalise sales

The state government is actively considering fixing a rational licence fee for the liquor retail outlets in the new policy which will come into existence from June.

Sources told this newspaper that the government has, in principle, decided not to take over the retail trade. The excise department officials had already started preparations for the new policy and Chief Minister N. Kiran Kumar Reddy is keen on wideranging consultations before accepting the policy.

The Chief Minister would talk to opposition parties, distillers and retail traders, besides social organisations as part of the consultation process.

“We are presently working on two options - reducing the licence fee sharply or capping it at the present State exploring the option of having a uniform licence fee and bring down retailers’ margins but increase sales of liquor Second option is to cap the present licence fee and hike the retailers’ margins, making the high prices official rate - and in both cases, selection of the prospective retailer shall ideally be through draw of lots,” a senior official said, adding that bidding will again bring in unhealthy competition that may eventually lead to MRP violations.

Sources said that in the first option, a uniform licence fee of `15 lakh to `20 will be fixed and the retailer margin will be brought down from 25 per cent to below 10 per cent. “The loss of revenue out of fixing rational licence fee could be offset through reduced retailer margin and increased sale, a direct result of ensuring MRP,” the official pointed out.

The traditional players in the retail trade also indicated to the government that reduced margins will not impact them as the licence fee will be very low.

In the second option, the officials suggest that the government should retain the present licence fee without looking for the regular 10-15 per cent hike whenever the new licences are issued every two years.

They said the government could increase both the liquor prices as well as the margin of the retailers. “As it is, people are used to paying premium and the difference in the rate now being pocketed by the retailer will become official,” sources said.