Liquor bicker

You won't be able to buy liquor at a private liquor shop in Tamil Nadu after November 28. Stocks of liquor are already low at shops in Chennai. "Until the government reconsiders its orders we will continue to lift only the day's requirement," says one retailer glumly.

Tamil Nadu's private liquor retailers are in the dumps, though the state's babus are saying cheers.

Indeed, liquor shop owners have kicked up a rumpus and gone to court "" at last count, some 1,600 cases had been filed in the Madras High Court; these are scheduled to be heard in a day or two "" and warn that up to 60,000 jobs will be lost.

The reason for this rumpus? The Tamil Nadu government recently issued an order to shift the retail sale of Indian Made Foreign Liquor (IMFL) from private shops to state co-operatives and the Tamil Nadu State Marketing Corporation (TASMAC).

For this, an Ordinance amending the Tamil Nadu Prohibition Act, 1937 was promulgated in the last week of October this year. The Tamil Nadu government's ostensible reason for doing this is to curb the retail liquor trade forming a cartel.

Says a government source; "Historically the liquor cartel does not allow bidding for all the shops in the state. This ensures that the sale in the limited number of shops is maximised. This led to a huge revenue loss in terms of the licence fee for the shops for which no bidding was done."

Neither government officials nor liquor traders state their positions on record. But a liquor trade source estimates that Tamil Nadu has around 5,200 liquor shops. Around 1,500 of these are state owned or run by cooperatives.

In Chennai alone, some 600 shops are owned by private individuals. "The total revenue, including from the sale of liquor and from taxes, in this state is around Rs 4,500 crore annually. This also includes the licence fee collected from shop owners, the excise duty paid by manufactures and sales tax collected from us," said one shop owner who does not wish to be named.

The government had earlier introduced the 'lots system' "" where the sum to be bid for the shop is fixed but winners are selected through a random method, say, by mixing the applicants' names and picking a few "" to curb malpractices in the IMFL trade.

The 'lots system' was expected to prevent the formation of cartels, which had greatly affected the earlier auction system. But, says the government order, a sizeable number of shops remained unlicensed in 2002-2003.

That's because, trade sources say, of the inadequate price of the final product. "The margins on liquor in Tamil Nadu are the lowest. We also pay the highest tax. That is the reason shops under the lot system were not taken up," argues another trader.

Tamil Nadu has a fairly long history of swinging between the lot and auction systems. There have been instances of auctioning having been done under police protection. Though the auctioning system, with police help, helped the government obtain higher licence fees (one government source says there have been instances of a single shop contributing Rs 25 lakh in annual licence fees), this could not be sustained.

Licence fees, including bar fees and other taxes, fetch the state Rs.19.10 lakh per shop. The liquor trade complains that while the licence fee for shops has soared from Rs 1.25 lakh in 1989 to the current Rs 15-20 lakh or more, the price of liquor has not gone up in line with the increase in licence fees. "Through our trade associations, we have given enough petitions to the state asking it to hike the rate," one trader complains.

Even as the trade and the government await the court's verdict, TASMAC has begun recruiting shop superintendents and a sales force. An estimated 22,000 people are likely to be hired to supervise and sell liquor in the government-controlled shops.

For some 4,800 supervisors' jobs, TASMAC has received 9,200 applications. Excepting in Chennai and Coimbatore, in most districts these jobs are in much demand. TASMAC is offering Rs 2,000 a month and Rs 1,000 a month for a shop supervisor and salesman, respectively.

Each will also earn Rs 5,000 and Rs 3,000, respectively, by way of commissions on the sale of liquor. So TASMAC has been hiring marriage halls and conducting interviews late into the night.

TASMAC is also in discussion with the public works department on the internal d"šcor for over 500 shops in Chennai.

But liquor traders retort that 60,000 jobs will be lost "" roughly 12 people per shop at the 5,200 shops in the state "" because of the government decision to ban the sale of liquor by private retail outlets. "Even with five members in a family, we are talking about the denial of sustenance for three lakh people in the state," says a liquor retailer.

Apart from private retail outlets, Tamil Nadu has 4,000 cooperative society shops at the village level. There are quasi-government bodies and so will continue to be controlled by the state. No staff will have to be hired for these shops.

But Tamil Nadu would do well to cock an eye at the experience of state-controlled liquor vending in the capital. At Delhi's state-run shops, the staff are indifferent to customers. Plainly, liquor buyers in Tamil Nadu won't be toasting the government's latest initiative.