American comedian WC Fields once famously said, “There are only two real ways to get ahead today — sell liquor or drink it.” So, when the Indian government decided to relax lockdown restrictions, people lined up in front of liquor shops by braving the soaring summer temperatures, flouting social distancing norms and pushing everyone out of the way. Soon, chaos ensued. Overnight, photos of kilometers-long queues, videos of cops caning violators and sexist jokes on women purchasing liquor went viral on social media. In Mumbai, law and order situation worsened to the point where BMC had to order closure of liquor shops within the first two days. A man in Karnataka shocked all with his alcohol purchase worth Rs.52,841, while another in Uttar Pradesh shot his wife dead when she refused to give him money to buy alcohol.
In the meantime, the excise departments of states were on a different high. Maharashtra, Karnataka and Uttar Pradesh reportedly collected Rs.110 million, Rs.450 million and Rs.1 billion on the first day, respectively. On the second day, Karnataka saw sales hitting a record high of Rs.1.97 billion against an estimated average of Rs.540 million per day. Due to the prolonged lockdown, state coffers were almost running dry when the decision to open liquor shops offered a major relief. RBI in its annual publication State Finances: A Study of Budgets of 2019-20 mentions that excise duty on alcohol accounts for around 10-15% of Own Tax Revenue of a majority of states. In 2019 alone, states and UTs collected Rs.1.76 trillion as excise duty and VAT from alcohol. This is one of the major reasons why chief ministers have never been supportive of bringing alcohol under GST’s purview. To make more hay while the sun is shining, Delhi government decided to impose a special ‘corona fee’ on liquor prices and many states such as Uttar Pradesh, Andhra Pradesh and West Bengal, followed suit. Now, will the high prices discourage people from buying that golden liquid they had longed for? Probably not.