RAJASTHAN: A SHOT AT RECOVERY
Marking a major departure from its conservative liquor policy, the Rajasthan government, on April 1, issued a notification allowing bars in the state to operate microbreweries. The state’s excise department is its second-largest source of tax revenues and, after 15 years of stagnation, Chief Minister Ashok Gehlot has finally ushered in changes. The move has surprised many since Gehlot, a teetotaller and professed Gandhian, is not known to be sympathetically inclined towards stakeholders in the liquor business.
The apparent change of heart and the new liquor policy are, in fact, driven by the desperate need to shore up state revenues—for possible government interventions during the ongoing pandemic. The loss of revenue has, of course, been exacerbated by the pandemic and its devastating effect on tourism. A new, more liberal liquor policy, it is reasoned, might ease the flow of revenues into the state coffers. To this end, aside from the go-ahead for microbreweries in bars, new excise rules were also announced on February 6.
The state has also allowed an additional 2,100 urban vendors to sell both IMFL (Indian-made foreign liquor) and country liquor, raising the total number of vendors selling both IMFL and country liquor from 5,600 to 7,700. The new policy also does away with the lottery system for allotment of liquor shops. In its place, an e-auction system has been introduced. Welcoming the move, Nilesh Mewara, president of the Rajasthan Liquor Welfare Society, says: “This will give genuine bidders better choice and a chance to own two shops in a city and five in the state, as opposed to the earlier lottery system. Many winners used to sell off their shops.”
The policy has also done away with the much-reviled Covid surcharge, which will reduce the rates of beer and other ready-to-drink bottled alcoholic beverages by 20 per cent. The excise department has set a revenue target of Rs 13,000 crore this year against Rs 11,500 crore last year, when, due to the Covid lockdowns, the state could only reach Rs 9,700 crore, says T. Ravikant, secretary, revenue. “This year, the government has already earned Rs 9,890 crore from the auction, with another Rs 500 crore expected from the auction of the leftover 600 shops,” he adds. An additional Rs 3,500 crore will come from the various fees applicable.
Gehlot has also earmarked Rs 500 crore for tourism in the state. “These are pleasant surprises,” says Randhir Vikram Singh Mandawa, president of Indian Heritage Hotels Association, co-chairman of FICCI Rajasthan State Council, and CMD, Mandawa Hotels. “Gehlot has thought about us when the Centre has been indifferent to the Corona-massacred tourism sector.”
Tourism in Rajasthan, despite being a major source of revenue, has not been lavished the kind of attention many feel it deserves. The sector contributes, according to some estimates, about 15 per cent (much higher than the national average of 9 per cent), to the desert state’s GDP, which lacks big industry or major trade and agriculture. In fact, tourism was granted industry status in Rajasthan in 1989 without the state government having done much about it.
The tourism bodies are now working on a proposal demanding that industry benefits—relief in electricity rates and urban and municipal taxes, currently being charged on commercial basis—be extended to the Covid-hit sector. “The government should be rushing to bring tourism on par with industry if it wants to save its golden goose,” says Kuldeep Singh Chandela, president of the Hotel and Restaurant Association of Rajasthan and of the Rajasthan Association of Tour Operators.
Many, however, believe that these liquor- and tourism-related measures are too little and have come too late. “People, including women and the youth, have moved on from beer to whisky. I wonder if anyone will be able to recover the heavy investment required in setting up a microbrewery when half a dozen good brands of beer are available easily,” says Ajay Singh Balunda, who runs The Rocks, a restobar in Jaipur. The excise department has fixed the licence to establish a microbrewery at Rs 5 lakh with a daily production cap of 1,000 litres. The excise duty imposed will be Rs 60 per litre. Balunda feels that allowing the sale of hard liquor in restaurants and bars would have been better. Rajasthan currently allows the sale of hard liquor only in hotels with a minimum number of 20 rooms. “Will anyone first go to a hotel bar to drink Scotch
before going to their favourite restaurant, which only serves beer and wine?” asks Balunda, who believes that these rigid norms have cost the government revenue and hindered the growth of the tourism sector. Liquor in Rajasthan is far more expensive than in nearby states and domestic tourists often carry their own when visiting the state.
Excise duty on liquor makes up more than seven per cent of the state’s revenue, which, incidentally, is also the amount it spends on public healthcare. Gehlot, in order to bring in more money for welfare schemes in Corona times, has risked a few relaxations, but his move has not gone unnoticed by critics, who have gleefully pointed out the apparent contradiction between Gehlot’s new policy and his avowed Gandhian way. The ongoing partial lockdown in the state (April 19 to May 3) makes exception for not just essential goods but also liquor shops. “The decision to allow liquor vendors to open their shops [during a lockdown] flies in the face of Gehlot’s professed Gandhian ideals,” said BJP’s Vasudev Devnani, former minister and MLA.
In Rajasthan, any move to liberalise the excise policy for liquor lays the government open to criticism and a possible backlash—as had happened with BJP’s Vasundhara Raje during her first tenure as chief minister in 2003. She had succeeded in shutting down cartels of local politicians running liquor businesses and set up a state corporation to procure and distribute liquor. She had also made liquor shops accessible by locating them in respectable neighbourhoods. This had led to a sharp increase in excise revenue—to Rs 1,800 crore within three years after stagnating at Rs 1,100 crore for three years. Interestingly, Gehlot’s campaign against Raje at the time had involved accusing her of flooding the state with liquor. When Raje had returned to power in 2013, she had disappointed many by her over-cautiousness, rejecting demands to allow liquor vendors within malls, delaying closing hours to past 8 pm, setting up microbreweries and allowing sale of hard liquor in restobars.
During his second tenure (20082013), Gehlot retained most of the features introduced by Raje in the state excise policy, but, keeping in mind public sentiment, ordered closure of liquor shops by 8 pm and shut down some of the shops located in residential areas. Two years ago, Gehlot, quite the master at managing optics, also named a college in Suratgarh after Gursharan Chhabra, a former MLA who died in 2015 in Jaipur while observing a fast unto death demanding prohibition in the state. He also named an awareness campaign about liquor and its effects after the late MLA.
It is far from certain, though, that the new liquor policy and the hefty allocation for tourism can immediately come to the rescue of the bleeding sector. The latest Corona curbs have led to a near-total cancellation in hotels. In 2020, according to the state tourism department, tourism in Rajasthan registered a 72 per cent decline year-on-year. Thanks to the pandemic, foreign tourist numbers (450,000) in 2020 were down to almost a fourth of what was recorded in the previous year (1.6 million). Domestic tourist numbers saw similar attrition—from 52.2 million in 2019 to 15 million in 2020. With fewer foreigners expected to land here over the next two years, domestic tourism holds the key to the sector’s revival. According to Arvind Jain, who runs hotels Sawai Vilas and Ranthambore Regency in Sawai Madhopur, and Vanaashrya in Sariska, “Instead of seeing us as a luxury and as Corona spreaders, the government should treat us as a generator of employment and revenues, and as Covid-safe getaways for tourists.”
According to Mandawa, tourism bodies want a portion of the Rs 500 crore allocated for tourism to be set aside for marketing and promotion, support for inter-city air connectivity, renovation of all RTDC (Rajasthan Tourism Development Corporation) properties (which are reporting massive losses and are mostly shut), to support the mahouts, tourist guides, folk musicians and dancers and for the upkeep of monuments. Gehlot’s revival plan is underway, but we’ll have to wait and see how the pandemic pans out, which might have a bigger hand in determining how recovery goes—at least in the near term.