Telangana tweaks liquor policy for a windfall

Hyderabad: Telangana has eyed the last resort of any revenue-depleted government for a way out — liquor. The state government is considering bringing major changes in the new excise policy, set to come into force from October 1, primarily if not solely motivated by a desire to make huge revenue gains.

The most significant change would be the removing of the refundable Earnest Money Deposit (EMD) option but increasing the non-refundable application fee. As per present policy, the non-refundable application fee is `1 lakh, but must be submitted along with Rs 5 lakh as a refundable EMD.

With the EMD clause, only serious liquor businessmen apply for liquor shop and outlet licences. By removing the EMD, the government hopes, even non-serious players also would jump into the fray, leading to a windfall gain accruing from sale of applications.

Additionally, with neighbouring AP having decided that the government alone would run all liquor shops, liquor businessmen there have became jobless, and are likely to jump onto the party in Telangana state.

The Telangana state government is likely to increase application fee from Rs 1 lakh to Rs 2 lakh. In the previous auctioning of liquor shops, the government had earned over Rs 300 crore through application fee alone, and at the very least, would see a multi-factor increase.

With the removal of EMD and competition from AP liquor businessmen, the number of applications would surely increase, and give a boost to revenues. In Telangana, there are about 2,240 liquor shops across the state.

Usually only serious businessmen apply for more than one shop. If more than one application comes for a shop, allotment is done through lottery. After allotment, the total licence fee for the liquor shop has to be paid in six instalments over two years.