INVC NEWS
New Delhi : The recent governmental decision to implement a 15 percent increase in liquor contract renewals for the new financial year has sent shockwaves through the industry. Starting today, shop owners must submit forms for renewal, underlining the seriousness of the situation. Preceding this, the Excise Department issued an implicit threat to small-scale liquor contractors, warning that failure to renew 75 percent of shops would result in the government reallocating contracts for the entire district.
Renewal Pressure and Immediate Price Surge
Faced with this ultimatum, small group contract takers found themselves in a state of panic, swiftly opting to renew their shops. Concurrently, the new financial year ushered in immediate increases in liquor prices. Both English and country liquor witnessed significant hikes, with English liquor rising by £30 per pound and country liquor, both plain and masala, by £20. In Jabalpur alone, daily liquor sales amount to a staggering £3 to 3.5 million.
Formation of Syndicates and Adjustments in Prices
In an effort to mitigate the impact of price hikes, a clandestine syndicate of liquor contractors has emerged. Their aim? To acclimatize liquor enthusiasts to the heightened prices. In a remarkable show of unity, all contractors have rallied together. With tacit approval from the Excise Department, they have collectively raised prices to offset losses incurred during the remaining 12 to 14 days.
Pressures from Authorities and Market Dynamics
Sources indicate that contractors felt coerced by Excise officials, who bluntly warned them of potential consequences should contracts remain unrenewed. Contractors from states like Punjab and Chhattisgarh stand ready to seize contracts, not just at the district but even at the divisional level. This reality underscores the urgent need for renewal, as failure to meet the 75 percent renewal target could prompt tenders at the district level.
Adaptation Strategies and Government Targets
With the policy of single-tender auctions (for small groups) in effect in Madhya Pradesh since 2003, small contractors have been compelled to renew contracts, even at the risk of financial strain. The recent increase in liquor prices by 10-15 percent, endorsed by the Excise Department, provided a silver lining for contractors. Currently, Jabalpur hosts a contract worth £709 million, with the government aiming for an £816 million excise revenue target for 2024-25. It is anticipated that contracts nearing £800 million will be secured against this target.
Contractors Unite for Survival
The sudden surge in liquor prices and the associated pressures on contract renewals have created a climate of uncertainty for both contractors and consumers alike. However, through strategic alliances and adaptation, stakeholders aim to navigate these challenges. As the industry braces itself for the road ahead, proactive measures and collaboration will be essential in sustaining operations and meeting governmental targets.
