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Saturday, November 27, 2021

Liquor prices in Delhi: What the increase in wholesale rates will mean for consumers

The revision in rates is the result of changes brought about by the new excise policy, under which almost all excise duty and VAT owed to the government have been subsumed under the licence fee.

By: Express News Service | New Delhi |
October 31, 2021 10:40:56 am
According to the order issued by the Excise Department on Thursday, the wholesale price of Blenders Pride Rare Premium Whiskey at present is Rs 266. Its new price will be Rs 291 after the change. (Representational Photo)

An increase of around 8-9 per cent is expected in the price of liquor in the city as the new excise policy of the Delhi government is set to be implemented. This means that if a brand of liquor cost Rs 400 in wholesale, its cost would now be Rs 432.

The revision is the result of changes brought about by the new policy, under which almost all excise duty and VAT owed to the government have been subsumed under the licence fee at the time of giving licences. Earlier, these had to be paid by the liquor vend owners to the government on every unit sold. The government also said that the earlier structure bred corruption as there was incentive to hide the real amount of liquor sold.

According to the order issued by the Excise Department on Thursday, the wholesale price of Blenders Pride Rare Premium Whiskey at present is Rs 266. Its new price will be Rs 291 after the change.

As per the order, the impact on the consumer will be taken into account before fixing retail prices so that there is less incentive for people to buy liquor from NCR towns that fall in Uttar Pradesh and Haryana.

“It is important that the consumer should not be burdened with price increase. The changes brought about in the new excise policy will need reasonable time to play out in the market. In the overall interests of consumers of Delhi, to prevent interstate smuggling, the MRP for 2021-22 should as far as possible be in the same range as prevailing in Delhi. This can be achieved if the currently prevailing amount of Excise Revenue, VAT and retail margin as per the rates for the year 2020-21 is continued at approximately the same level in the year 2021-22. At the same time, the impact of increase in WSP (if any) as per the parameters approved for the year 2021-22 also need to be factored in while fixing the MRP,” the order stated.

The excise department has ordered that the ex-distillery price (at which liquor is sold to wholesalers) in Delhi will be the lowest across India so that the impact of the increase in wholesale price is minimal.

In the order, the government gives the example of what the final retail price could be after the changes are implemented. In case the old MRP of a brand was Rs 470, it will now be around 490, the calculations by the department show. This is an effective increase of around 4.25%.

What is the new liquor policy?

Under the new policy, the government will completely exit the liquor business and only private vendors will be allowed. This change comes into effect from November 17, which is when the new private vends will start functioning.

At present, all private vends have been shut in the city before the implementation of the new regime. Only around 450 government vends are open. This is only a temporary arrangement and once the private vends are functional, all the government vends will close.

This also means that there is a scarcity of variety of alcohol in liquor vends at present. The shortage started in September, when private vends stopped buying stock as they would remain shut for a long time and the tendering process for licenses was not yet complete. Thereafter, they shut on October 1.

Government vends traditionally have had fewer brands and types of liquor, and the impact is evident.

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