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Will highway liquor ban impact Karnataka excise revenue target?

LiveMint logoLiveMint 26-07-2017 Sharan Poovanna

Bengaluru: Almost a month into the ban on liquor establishments along state and national highways, the Karnataka government is staring at the possibility of missing its excise revenue collection target for the year.

Between 1 April and 24 July, the state excise department’s revenue grew by just 3.6%, against the targeted 9% increase to Rs18,050 crore in the full financial year, officials at the department said on condition of anonymity.

The department is hoping that business will pick up once the centre decides to act on a request by the state to denotify national highways passing through cities and towns across Karnataka.

On 1 April, the Supreme Court passed an order banning all liquor establishments within 500 metres of all state and national highways. Karnataka, among other states, had filed an appeal seeking relief from the ban.

On 11 July, the SC dismissed a petition challenging the Chandigarh administration’s decision to denotify national and state highways and convert them to district roads-paving the way for other states exploring means to get around the ban.

Thousands of establishments across the country were forced to shut shop and let many of their employees go as a result of the ban.

Over 6,000 liquor-serving establishments which included wine stores, bars and restaurants and hotels, among others, in Karnataka were affected by the verdict. Of these, around 900 were in Bengaluru.

Rajendra Prasad, additional commissioner in the Karnataka excise department and the person in charge of enforcing the Supreme Court ban in the state, says the state government had passed multiple notifications and sought amendments to the ban to safeguard the sector that employs thousands of people.

Earlier this month, the Karnataka government denotified around 1,476.69kms of state highways passing through the cities and towns, classifying them instead as urban and local roads.

Karnataka, among other states, also filed an appeal before the apex court for relief from the impact of the ban on government revenues and livelihood.

Prasad said 589 outlets had relocated; over 2,600 outlets had resumed business after the decision to denotify state highways.

Even so, at least 3,400 establishments remain closed due to their proximity to national highways. The state government had also written to the centre to denotify 858kms of national highways passing through cities, towns and villages in Karnataka. A total of 6,572kms of national highways pass through the southern state.

Prasad said the excise department had decided to halve relocation charges to 25% of the annual licence fee and remove hurdles for so-called CL-2 licence holders (retail shops) to relocate to any part of the district—which wasn’t allowed earlier.

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