Karnataka government eyes 2nd beer price hike in a year, targets record excise revenue

Beer will cost another ₹6-8 more per 650-ml bottle in Karnataka, with the state planning to increase the Additional Excise Duty on it.

ByMahesh M Goudar

Published Jan 24, 2024 | 10:00 AMUpdatedJan 24, 2024 | 10:00 AM

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The Siddaramaiah-led-Karnataka government has proposed yet another hike in the Additional Excise Duty (AED) on beer — this time by 10 percentage points.

The move comes within seven months of an increase in the price of liquor in the state.

After coming to the helm in Karnataka, the Congress government increased the AED on Indian Made Foreign Liquor (IMFL) by 20 percent on all 18 slabs and also 10 percent on beer in July 2023.

Now, the state government has again proposed to increase the price of beer, which is likely to be costlier by ₹6-8 per 650-ml beer bottle.

It may also be noted that the state government has set a revenue target of ₹36,000 crore for the Excise Department for the ongoing fiscal year of 2023-24.

“The annual revenue stood at ₹26,158 crore at the end of December. We are expecting to reach the given target by the end of the ongoing fiscal year,” Excise Department officials told South First.

Minister for Excise RB Thimmapur also confirmed to South First about the proposed price hike on beer prices.

Also read: Karnataka sticks to 21-year minimum age limit for alcohol consumption

Details of the hike

The government has proposed to hike the price of beer by amending the Karnataka Excise (Excise Duties and Fees) Rules of 1968. It has issued a notification in this regard, a copy of which is with South First.

Military canteens, Border Security Force canteens, paramilitary force canteens, and bonded warehouses have been excluded from the proposed price hike on beer.

In these canteens, the proposal has been made to hike the price of beer by ₹2.

Confirming the proposed price hike on beer, Excise Department Joint-Director K Shivayya told South First: “It is true that the government is increasing the AED by 10 percentage points. We are increasing the beer price because when the liquor price was hiked in July 2023, we hiked the price of IMFL products by 20 percent, but the beer price was hiked only 10 percent.”

He added: “The department has taken this decision to balance it with IML products’ price rate hike. There are no other reasons.”

He also noted: “Beer consumption has seen a rapid surge after Covid-19. The new tariff is likely to be effective in a week or two.”

In the last three fiscal years, beer sales have witnessed a huge surge. In 2020-21, an average of 237.82 lakh carton boxes were sold every month. In the 2021-22, that number was 268.83 lakh carton boxes.

In the 2022-23 fiscal year, beer sales saw a huge surge, where the average stood at 390.66 lakh carton boxes, according to the Excise Department.

Over 12,245 shops have liquor licences in Karnataka. They include 3,900 retail shops, 277 clubs, 82 star hotels, 2,279 hotels and boarding houses, 3,626 bars and restaurants, 1023 MSIL shops, and 730 retail vendors.

Admitting that the government has proposed to hike the price of beer, Minister for Excise RB Thimmapur told South First: “The proposal has been sent to the Finance Department for approval.”

Thimmapur, meanwhile, ruled out the allegations that the price was being hiked to fund the Congress’ poll guarantees in the state.

Also read: Tribal youth are taking to sports to keep the bottle at bay

New revenue targets

With three months left for the end of the ongoing fiscal year, the Excise Department has grossed a whopping ₹26,158 crore in revenue till December 2023.

The state government has set a revenue target of ₹36,000 crore for the Excise Department for the ongoing fiscal year. With this revenue rate, the officials in the department are confident of achieving the target.

Shivayya told South First: “The increase in beer price is expected to increase the monthly revenue by ₹20 crore.”

According to the Excise Department: “There are 135 units of distilleries, breweries, and wineries in Karnataka. Among them, 32 are IMFL-manufacturing units, 12 are breweries, two make fortified wine, 15 make fruit wine, six are fortified and fruit wineries, and 68 are microbreweries.

In the last three fiscal years, the annual revenue of the Excise Department has been increased by an average of ₹3,000 crore in Karnataka.

The annual revenue stood at ₹23,332 crore in 2020-21, ₹26,377.68 crore in 2021-22, and ₹29,920.37 crore in 2022-23.

Thimmapur told South First: “We are confident that the department will achieve the given target, considering the previous year’s revenue targets.”

However, he added: “The government has no plans to issue fresh liquor licences this fiscal year. We might probably start issuing new licences next year.”