Withdrawing new liquor policy set to hit Delhi revenues by 45% in FY23

State govt could still raise revenue surplus for the year after reverting to old way of conducting liquor trade

The Delhi government’s abandonment of a new excise policy is projected to dent its tax revenues from liquor by 45 per cent in FY23. Still, the state government 's own tax revenues are projected to rise slightly by 1.6 per cent for the year, helping it to increase its revenue surplus position.

Data in the state budget, which was presented in the assembly on Wednesday, showed that the government will get Rs 6,499 crore from excise duty on country spirits, foreign liquor and spirits in the revised estimates (RE) for 2023-24 against Rs 9,450 crore pegged in the budget estimates (BE).

While the state government would receive Rs 6,247 crore from foreign liquor and spirits now against Rs 8,754 crore projected in the BE, it would earn just Rs 252 crore from country spirits against Rs 700 crore projected earlier.

Excise duty on alcohol would give the government Rs 7,364 in FY24 (BE), which is higher by around 13 per cent over RE of the current financial year. However, it would be less than 22 per cent over BE of 2022-23 due to the state government reverting to the old taxation policy for alcohol.

The new excise policy was introduced in Delhi in November 2021, making sweeping changes to liquor trade in the city. The government exited the customer-end of the trade entirely, shutting all state-run liquor vends, and the sale of liquor was handed over exclusively to private players. Before the policy was implemented, there were 849 liquor shops in the city.

The government ended the new policy and reverted to the old one in August 2022.

Even after taking a hit from taxes on alcohol, the state's own tax revenue is projected to rise to Rs 48,450 crore in the current financial year in RE from projected Rs 47,700 crore in BE. This is further projected to grow to Rs 53,565 crore in the next financial year , a rise of 12 per cent over BE of FY'23 and 10.5 per cent over RE.

This would help the state government maintain its revenue surplus position. In fact, revenue surplus of the government is projected to increase by 25 per cent to Rs 9,529.7 crore in RE of the current financial year against Rs 7601.2 crore pegged in BE.

The revenue surplus is, however, projected to come down to Rs 5,786.6 crore in 2023-24 (BE).

Among various changes in its policies, the state government had given the option to the people to choose for power subsidy against its earlier policy of giving it to everyone till 400 units. However, this has not saved the government much as its spend on this subsidy is projected to stand at Rs 3,161.2 crore in RE of the current financial year, only a bit less than Rs 3,250 crore pegged in BE. The subsidy is again projected to cost the state exchequer Rs 3,250 crore in 2023-24.