Govt to appoint panel to determine liquor prices

Move seen as a bid to impart transparency to the whole process

The Andhra Pradesh government has decided to entrust the price negotiation of liquor brands to be procured from manufacturers for the year 2005-06 by the Andhra Pradesh Beverages Corporation (APBCL) to a committee led by a retired High Court judge.

The move is being seen as a bid by the government to impart transparency to the whole process and not give any scope for fresh controversies on account of rate contracts. Negotiations for rate contract agreements with liquor companies had until now been handled solely by APBCL.

Though the constitution of a committee led by a retired High Court judge was recently announced by chief minister Y S Rajasekhara Reddy in the state Assembly only for the purpose of studying the price structure of various liquor brands in different states and other contentious issues attached to it, the government as an after-thought has decided to entrust the finalisation of new rates to the same committee, sources here said today. The committee, though, is yet to be appointed.

The Andhra Pradesh Beverages Corporation (APBCL) today issued a tender notification inviting manufacturers for submission of price quotations for fresh rate contracts agreement for the procurement of liquor (IMFL), beer and wine for the next financial year beginning April 1, 2005.

In a significant change, the corporation has lifted the existing ban on import of liquor in ordinary category, allowing any firm which has its manufacturing facility anywhere in India to bid for supply of its cheaper brands.

The move, however, has been strongly resented by the local distilleries which, besides having their own brands, have been manufacturing ordinary category brands for outside companies on account of import ban. "This is only to ensure more competition in the segment," APBCL sources told Business Standard.

The state government is in a fix trying to prove itself different from the earlier government in determining liquor prices.

The present leadership, when it was in the opposition, had alleged large scale corruption citing the price variance and brand variance in comparison with the neighbouring states and also accused the then chief minister N Chandrababu Naidu of receiving Rs 500 crore in kickbacks from liquor companies.

With the opposition Telugu Desam Party leadership determined to turn the tables on the Congress government on the same count, the government is looking at various alternatives to avoid such a situation.

But so far there was no clear stand on the contentious issues either in the excise policy or in the tender notification for rate contract exercise.

A senior official in APBCL has indicated that the issues raised by the Congress when it was in the opposition, where the basic price offered by the manufacturer of a liquor brand varied from state to state, gave scope for allegations of corruption. The price variance had earlier been justified by the manufacturers who said that they were selling sub-brands under their umbrella brand.

The APBCL official, however, indicated that such issues also will now come under the scanner of the committee while determining the prices of each of these brands.

"All I can say now is that there is a sincere effort being made by the government to bring parity in prices and other related issues," the official told Business Standard. According to him, some clarity is expected to emerge on these issues in the next two three days.