Farm loan waivers to hit your liquor; you need to prepare to pay more

Raising liquor taxes - which bring in nearly 25 percent of revenue - is the most likely option as state governments are unlikely to borrow and worsen their debt to GDP ratios

A spate of political promises of waivers on farm-loan repayments in Indian states has an unlikely victim: alcohol companies.

States are expected to hike taxes on liquor — one of the top three revenue sources — as they need to plug the fiscal hole arising from bearing the burden of farm-loan repayments. Any rise in tax will impact alcohol demand as firms will have to pass the additional levy to consumers, according to Edelweiss Securities.

Farm waivers are on the agenda of all political parties as Prime Minister Narendra Modi struggles to alleviate agrarian distress ahead of a national election