Karnataka permits bars, clubs to sell liquor at MRP

The move by the Karnataka government is part of its plans to shore up revenues from excise and help the cash-starved state in its battle against COVID-19 and the economic uncertainty that shrouds it.

The notification by the excise department says that establishments with cl-4 (clubs), cl-7 (hotels and boarding houses) and cl-9 (bars and restaurants) outside containment zones and malls or shopping complexes be allowed to resume sales to ensure its stock like beer does not expire and add to their losses.

The excise department notification comes at a time when the B.S. Yediyurappa-led state government has eased lockdown restrictions in most parts of Karnataka including Bengaluru, its growth engine, that has been classified as a red zone.He said that Prime Minister Narendra Modi should declare Covid-19 as a national disaster and that Yediyurappa should demand a ₹50,000 crore special package for Karnataka.

With taps from the centre drying up, Karnataka has already increased excise prices by 17-25% (depending on slabs) that would help raise at least ₹2,000 crores. The state had set a fiscal target of ₹22,700 crore for the current year and has been clocking high sales ,when liquor sales started in the state.

Manu Chandra, the head of the Bengaluru chapter of the National Restaurants Association of India (NRAI) says that selling liquor at MRP would deplete the investments of such establishments.

The liquor that we have in our stores right now is essentially capital or investment that’s lying with us which whenever we open we may be able to sell at whatever margins we used to

He adds that owners of these restaurants pay a higher renewal fee and the MRP model would hit its “economics for a six".

He says that the lockdown happened at the end of March and much of the stocks had depleted with restaurants normally waiting till the beginning of April to replenish. He says that not everyone in the business may be able to sustain this model and may write to the excise department to stop liquor sales and only keep the kitchen open.