Retail liquor shops in Tamil Nadu, barring Chennai, will open on May 7, despite protests by political parties because the government is short of resources. On May 6, the government also announced a 15 per cent hike in the price of liquor sold through its outlets.
Initially, the government announced opening of all retail outlets across the State on May 7. As almost all opposition parties and the ruling All India Anna Dravida Munnetra Kazhagam’s allies protested against the move, the government partially rolled back its decision, and announced that retail liquor outlets in Chennai, a COVID-19 red zone, will remain shut. The AIADMK’s allies, including the Pattali Makkal Katchi and the Bharatiya Janata Party, had questioned the decision to open liquor outlets across Tamil Nadu, claiming that this move would lead to crowding of the shops, resulting in another spike in coronavirus cases. Most recognised political parties in the State have prohibition as a stated aim.
The daily liquor sale in Tamil Nadu nets about Rs.90 crore on an average. Of this, Chennai alone accounts for as much as Rs.20 crore. With all shops in Chennai remaining closed, this revenue shortfall is expected to be bridged to a large extent by the 15 per cent hike in prices.
The State’s precarious resource position has been repeatedly underlined by Finance Minister O. Panneerselvam, in the Legislative Assembly several times, including when he presented the Budget for 2020-21: “There is a large and unprecedented reduction in Tamil Nadu’s share of Central taxes received as devolution in the Revised Estimates 2019-20. As against the Rs.30,638.77 crore received as share of Central taxes 2018-19, the Union Budget presented on 1st February, 2019 had indicated that Rs.33,978.47 crore would be transferred in the Budget Estimates for 2019-20. In the Revised Estimates for 2019-20 presented recently, Tamil Nadu’s share of Central Taxes has been reduced to Rs.26,392.40 crore. A drop of Rs.7,586.07 crore is due to the lower collections expected in 2019-20 and the Rs.2,368 crore deducted on account of the excess releases made in the 2018-19 as the actual collection of Central Taxes fell below the Revised Estimates for 2018-19. This sharp decline is unprecedented and has placed the State finances in a difficult situation in 2019-20.”
Even the money due to local bodies have not been received, he said in the same speech: “Tamil Nadu is yet to receive arrears of Rs.4,345.57 crore due as basic grants to local bodies for 2019-20 and Rs.2,029.22 crore due as performance grant from 2017-18, based on the recommendations of the 14th Finance Commission. The State Government has repeatedly urged the Government of India to release the arrears at the earliest…. The grants recommended for urban local bodies in Tamil Nadu have been reduced by 31 per cent in 2020-21 compared to 2019-20 because of the faulty methodology adopted by the Fifteenth Finance Commission. We will urge the Fifteenth Finance Commission to correct this anomaly in their final report.”
The major areas where State government can raise resources are from taxing petroleum products, sale of alcohol, stamp duty, precious metals and jewellery sale, and motor vehicle tax. The last three items contributing to the exchequer is out of the question during a lockdown. The State government has also increased the excise duty on petrol and diesel.
After the decision to open liquor outlets, Ministers Sellur Raju and Rajendra Balaji had a strange explanation to offer from different locations in the State. Both said that the shops were being opened in view of the “prevailing circumstances”. The main concern was the welfare of the tipplers because many were travelling to neighbouring States to drink. AIADMK spokespersons appearing on debates on TV news channels on May 5, too, touted this “welfare” as the reason for opening the shops. Pressed further, they admitted that there was a financial crunch but the welfare of the people was at the heart of the decision.
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