New licensing system for liquor shops

By Our Special Correspondent

CHENNAI, JUNE 23. In a major policy change, the Government has given up the auctioning system for `Indian Made Foreign Liquor (IMFL)' retail vending shops and decided to introduce a new licensing system for the `block period' of 2001-04.

The new policy for which the Government has issued a G.O. has increased the total number of IMFL retail vending shops from 4700 to 6000.

The shift to the Andhra-type licensing system is motivated by the Government determination to `break' the propensity to form cartels through `money and muscle power' in bidding for IMFL shops under the old system and also to increase revenue from IMFL licenses alone.

The `privilege fee' of the IMFL retail vending shops for 2001-02 ``shall be worked out on `a notified area' basis, taking the average privilege fee of the last three years and providing for some suitable increase''. There will be a uniform privilege fee for a given notified area.

While the Commissioner of Prohibition and Excise and Collectors have been requested to take immediate action to implement the new order, June 28 has been fixed as the last date for receipt of applications.

In case, there are more than one eligible applications per shop, the selection ``shall be done by lots in the presence of the Collectors and licences shall be issued thereafter'', according to the G.O.

The Collectors have been instructed to grant licences by July 10 and the newly licensed shops should start functioning from July 16. The licences will have to be renewed every year.

In another significant modification, licencee should henceforth ``lift the minimum off-take fixed for the shop by the licensing authority''. Failure to do so for two consecutive months will invite penalty and `default' for another two months will lead to cancellation of licence.

Through the new system, the Government is aiming at a 67 per cent growth in revenue this year - an increase from Rs.489 crores, an average yield in the last three years, to Rs. 808.18 crores.

The `privilege amount' payable now for any notified area is 25 per cent to 30 per cent higher than the `upset price' fixed for each shop - that was the minimum revenue the Government expected under the earlier system.

Though the auctioning system was `slightly modified' in 1998 to reflect the `potentiality of the shop in a given locality', it failed to break the syndicate system, a hurdle to free competitive bidding, it is learnt.

The old system had a disadvantage of successful bidders not renewing all their shops in subsequent years, leading to revenue drop for the Government.

The proposed licensing system hopes to `eliminate' these defects, particularly in the context of a rather stagnant offtake in IMFL products since 1997-98. The Government is keen on stepping up excise revenue as 90 per cent of it is from IMFL.

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Section  : Southern States
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