States with high Corona Tax on liquor see 50% drop in sales in first half of current fiscal

Pan-India liquor sales down by 30% in first half of 2020-21 states should roll back tax increases to arrest fall in sales, sustain tax collection, prevent consumer misery: CIABC Director General Vinod Giri.

Complete ban on liquor sale during lockdown followed by imposition of steep Corona tax in some states has led to drop of almost 30% in sale of liquor across India in the first half of current fiscal. Situation has been worse in states like Andhra Pradesh, West Bengal, Puducherry, and Rajasthan, which still continue to impose Corona tax as high as 50%, where sales also has dropped by almost 50%.

“All India sales volume growth for IMFL segment for the first half of the year 2019-20 was 29%. Leaving out April when entire liquor trade was shut down under lockdown, the sales growth for the period May to September in 2020 was -16% over same period last year,” says the data compiled by the Confederation of Indian Alcoholic Beverage Companies (CIABC), the apex body of Indian alcoholic beverage industry.

Though the pan-India liquor sale has improved in the second quarter, it was the first quarter (April-June) which did the maximum damage. Second quarter (JulySept) sales improved over first quarter, rising up to 78 million cases (9 litres each) of IMFL which was 9% below the same period last year. The comparable number for first quarter (April – June) was -49%.

Overall, sales recovery in states that imposed no/marginal tax increases in light of Corona pandemic was better. Put together, sales were just 1% below same month previous year in September for these states. The comparable number in August also was same at -1%.

However, the drop in sales was much higher in states that imposed high Covidled taxes. Sales was nearly 30% below same month last year in September. Also, the quantum of decline in sales was in clear relation to the quantum of tax imposed.